Kim Byung-hwan, Financial Services Commission Chairman, Relay Meeting, Final Button 'Financial Holding Company'

Last Week of September, Final Meeting with Chairpersons of 5 Major Financial Holding Companies Expected
Seven Sessions Including Banks, Securities, Insurance, Credit Specialists, and Mutual Finance
Emphasis on 'Core Roles and Trust Restoration'... Calls for Fundamental Structural Reform
Woori Financial's Unfair Loan Allegations... Focus on Internal Control and Governance Improvement

Financial Services Commission Chairman Kim Byung-hwan and Financial Supervisory Service Chairman Lee Bok-hyun are talking ahead of the government-party meeting on measures to protect financially vulnerable groups and eradicate illegal private loans held at the National Assembly on the 11th. Photo by Kim Hyun-min kimhyun81@

Financial Services Commission Chairman Kim Byung-hwan is concluding the financial sector relay meetings starting last month with the financial holding companies. The meeting with the financial holding company chairpersons, postponed until after the Chuseok holiday, is expected to be held around the end of this month.

Through seven meetings, Chairman Kim raised key issues for each sector that he had mentioned as priorities since his inauguration, including household loan management, smooth landing of real estate project financing (PF), support for small business owners and self-employed individuals, and soundness of the secondary financial sector, urging active cooperation and fundamental structural reforms.

At the final meeting with the financial holding company chairpersons, the issue of improper loans involving relatives of former Woori Financial Group Chairman Sohn Tae-seung is expected to be a key topic, with calls for active internal control systems and efforts to improve governance.

According to the Financial Services Commission on the 17th, Chairman Kim will hold a meeting in the last week of September with the chairpersons of the five major financial holding companies: Yang Jong-hee of KB Financial Group, Jin Ok-dong of Shinhan Financial Group, Ham Young-joo of Hana Financial Group, Lim Jong-ryong of Woori Financial Group, and Lee Seok-jun of NH Nonghyup Financial Group.

Chairman Kim began the series of meetings on August 20 with the banking sector, followed by the specialized credit finance sector on the 22nd, insurance sector on the 28th, and financial investment sector on the 29th, meeting with CEOs. This month, he met with CEOs of savings banks on the 2nd, asset management companies on the 5th, and mutual finance sector CEOs on the 9th, serving as introductory meetings to explain policy directions. Only the eighth and final meeting with the financial holding company chairpersons remains.

Throughout the seven meetings, he delivered candid remarks to each sector. At the meeting with bank CEOs, he said, "As bank profits increase, social controversies arise. It is necessary to seriously consider why such criticism continues." Regarding household debt management, he urged, "Please establish a system based on autonomous repayment capacity, that is, the Debt Service Ratio (DSR)."

He emphasized the need to create a sustainable growth model. Chairman Kim said, "We must break away from the traditional business model relying on interest margins and the domestic market, and actively respond to the demands of the times to create a sustainable growth model," adding, "Innovation efforts must be tangible to financial consumers."

A meeting between Kim Byung-hwan, Chairman of the Financial Services Commission, and heads of major commercial banks was held on the 20th at the Seoul Banking Hall. Before the meeting, Chairman Kim and the attending bank presidents are taking a commemorative photo. Photo by Heo Young-han younghan@

To the Secondary Financial Sector: "Restore Trust by Fulfilling Your Original Role"… Emphasis on Fundamental Structural Reform

Regarding savings banks, specialized credit finance companies, and mutual finance sectors, which face significant soundness concerns such as rising delinquency rates and real estate PF defaults, Chairman Kim urged fundamental structural reforms in a stronger tone. At the meeting with savings bank CEOs, he said, "We are facing trust issues due to soundness concerns such as real estate PF defaults," and requested, "Please take the lead in the virtuous circulation of funds and restoring trust."

He particularly emphasized that the original role of savings banks is to supply regional and low-income financial services, stating, "It is necessary to soberly consider whether easy choices relying on the real estate market have been made rather than innovations to fulfill their original role." He also called for strengthening competitiveness through enhancing credit evaluation and sales capabilities, digital transformation efforts, and expanding non-face-to-face sales channels.

Regarding mutual finance institutions such as credit unions, Nonghyup, Suhyup, forestry cooperatives, and Saemaeul Geumgo, he pointed out that they have neglected their original roles by focusing only on external growth. Chairman Kim diagnosed, "They have concentrated solely on deposit competition based on tax-exempt benefits without sufficient capacity and planning," and noted, "The asset size of the mutual finance sector has expanded beyond manageable levels."

He added, "Excessive investments and concentration in specific sectors cause market distortions, leading to repeated crisis situations," and urged, "Please promptly resolve the problematic real estate PF within six months."

Financial Services Commission Chairman Kim Byung-hwan attended the specialized credit finance industry meeting held at the Credit Finance Association in Dae-dong, Jung-gu, Seoul on the 22nd, and took a commemorative photo with attendees including Jeong Wan-gyu, Chairman of the Credit Finance Association. Photo by Jo Yong-jun jun21@

To the Financial Investment Sector: "Zero Tolerance for Illegal and Unfair Practices"… Criticism of 'Short-term Profit Focus'

Regarding the financial investment sector, Chairman Kim pointed out a series of incidents damaging trust, such as mis-selling and illegal short selling, and declared a zero-tolerance policy toward illegal and unfair practices. He also noted that focusing on short-term profits has lowered trust and increased systemic risks.

Chairman Kim said, "During the Legoland incident, the focus on short-term profits damaged market trust in the securities industry and raised concerns about the spread of financial system risks," adding, "Securities firms, as financial companies growing with businesses, must reorganize to fulfill their original roles." He emphasized, "It is necessary to thoroughly re-examine internal control systems to prevent investor damage and internal incidents and accidents."

When meeting with CEOs of ten asset management companies, he pointed out that the development of the domestic market depends on the capabilities of asset managers, considering the overseas private pension market mainly investing in Target Date Funds (TDF), and requested efforts to develop stable long-term investment pension products. He particularly noted that compared to advanced countries, the proportion of indirect investment by investors is still very low, indicating that the asset management industry is not fully meeting investor expectations.

A meeting was held on the 29th at the Korea Financial Investment Association in Yeouido, Seoul, where Kim Byunghwan, Chairman of the Financial Services Commission, and CEOs of the securities industry gathered to discuss current issues such as corporate value enhancement and financial investment tax. Kim Byunghwan, Chairman of the Financial Services Commission, is delivering the opening remarks. Photo by Heo Younghan younghan@

Final Meeting with Financial Holding Companies… Focus on Internal Control and Governance Improvement

Attention is focused on whether Chairman Kim will mention the allegations of improper loans involving relatives of former Woori Financial Group Chairman Sohn Tae-seung during the final financial sector relay meeting with the financial holding company chairpersons. At his first press conference since taking office on the 12th, he expressed "very serious concerns" and for the first time mentioned the responsibility of management.

Since Chairman Kim urged bank CEOs to thoroughly re-examine internal control systems with a mindset of radical reform, emphasizing that banks must always be at the pinnacle of trust, it is highly likely that he will give more comprehensive orders to the financial holding company chairpersons. With the 'Accountability Structure Diagram' set to be implemented from January next year, he is expected to request swift and proactive preparations.

Also, as the financial holding company chairpersons are the top executives within their financial groups, key issues previously raised in the seven relay meetings?household debt, real estate PF, small business owners and self-employed support, and soundness of the secondary financial sector?are expected to be addressed.

Meanwhile, Woori Financial Group Chairman Lim Jong-ryong has minimized external schedules for over a month since the Financial Supervisory Service publicly disclosed signs of improper loans involving relatives of former Chairman Sohn on the 12th of last month, but has not issued any additional statements regarding the allegations.