Kim Byunghwan, Nominee for Financial Services Commission Chairman, Says "PF Equity Ratio Is Too Low"

"Agreement on Improvement Direction"
Strengthening Commitment to PF Soft Landing Policy Implementation
Expressing Opinions on Prepayment Penalty and Fourth Bank Licensing
Regarding Doosan Group Business Restructuring, "Aware of Market Concerns"
"No Guidelines for Gyeongnam Bank Performance Bonus Recovery Measures"

Kim Byung-hwan, the nominee for Financial Services Commission chairman, stated that the equity ratio of real estate project financing (PF) operators is too low and pledged to improve it. He also expressed his intention to implement management measures such as the liquidation of insolvent projects based on the results of the business feasibility evaluation in the second half of the year.

On the afternoon of the 22nd, during the confirmation hearing for the Financial Services Commission chairman held at the National Assembly's Financial Services Committee in Yeouido, Seoul, Kim responded to a question from Kim Sang-hoon, a member of the People Power Party, regarding the low equity burden ratio of real estate PF operators by saying, “I fully agree with the direction that we need to improve because the equity input ratio of real estate PF in our country is lower than that of foreign countries.”

Regarding suspicions that the Financial Services Commission’s voluntary agreement with major creditors in April last year to manage real estate PF, which included measures such as maturity extensions and deferred interest payments for projects facing difficulties, was an attempt to “hide insolvency,” Kim expressed the opinion that these were measures taken considering market conditions. When Kim Yong-man of the Democratic Party asked, “After last year’s policy, you reversed course in May this year by deciding to strengthen the conditions for maturity extensions,” Kim replied, “It seems that the real estate market situation was taken into account. Last year, there was hope that the high interest rates might not last long, so we focused on reducing shocks through maturity extensions, but this year, it seems that approach was not suitable, so the conditions were tightened.”

Kim also stated, “We will impose limits on the number of maturity extensions and require partial repayment of interest before deferring the rest. For insolvent projects, we plan to pursue auction sales and restructuring.”

Kim Byung-hwan, nominee for the Financial Services Commission chairman, is responding to lawmakers' questions at the confirmation hearing held by the National Assembly's Political Affairs Committee on the 22nd. Photo by Kim Hyun-min kimhyun81@

He also shared his views on excessive prepayment penalties and the new licensing of the fourth internet-only bank. Kim Jae-seop of the People Power Party asked, “If banks charge high prepayment penalties during refinancing, the reduced interest rates lose significance. The Financial Services Commission should provide guidelines.” Kim responded, “I believe banks should reflect only the actual costs they incur minimally. I will ensure that changes happen quickly.”

Regarding the controversy over the restructuring of Doosan Group’s business, he said, “I am aware of market concerns and will examine whether there are institutional aspects that need to be fixed.” When Kim Hyun-jung of the Democratic Party pointed out that the restructuring infringes on the interests of minority shareholders, Kim said, “I think companies leading these efforts should prioritize communication with shareholders.”

On the embezzlement incident involving about 300 billion won and BNK Gyeongnam Bank’s decision to reclaim performance bonuses from former employees, Kim clarified that this was not a directive from the Financial Services Commission. Shin Jang-sik of the Justice Party asked, “When questioned about the embezzlement incident at Gyeongnam Bank, the financial authorities explained that they wanted such measures. Has the Financial Services Commission ever issued guidelines to confiscate performance bonuses?” Kim drew a clear line, saying, “The Financial Services Commission would never set such a principle,” and added, “I heard that the Gyeongnam Bank board of directors made that decision.”

Regarding Yoo Dong-soo of the Democratic Party’s criticism that the share of policy finance in the total credit volume in the financial market is higher than that of the private sector, causing the market system to malfunction, Kim said, “I have agreed with this since my time as the first vice minister of the Ministry of Economy and Finance,” and expressed his determination, “I will look for areas that the private sector can handle first, remove overlaps, and manage accordingly.”