[Column] Investors Leave While Facing 'Hoengjaese' Tax... Who Is This Win-Win Finance For?

"Please, let's not use the words 'all-time best' and 'record high'...
Banks forced to accept criticism and pay windfall tax as demands for 'win-win finance' grow"

"Please, let's skip the terms 'all-time best' and 'record high.' I sincerely ask you."

Last year, even after achieving record-high profits, the banking sector pleaded with reporters like this. The more profits they make, the harsher the criticism they face. From the beginning of the year, they have been criticized for 'interest profiteering,' and on top of that, financial authorities and politicians have joined forces to demand 'win-win finance.' They are in a position where they must accept criticism and also pay a 'windfall tax (excess profit recovery).'

As demands for win-win finance increased again this year following last year, concerns grew inside and outside the banking sector that win-win finance might become a regular practice. Ultimately, Lee Jae-myung, leader of the Democratic Party of Korea, put the final nail in the coffin. On the 20th, Lee, considered a major presidential candidate, convened the heads of the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup Bank). At this meeting, Lee plans to discuss key topics such as financial support measures for small business owners and reforming the system for calculating additional interest rates.

The banking sector has already been implementing its own win-win measures. In response to President Yoon Suk-yeol's criticism of interest profiteering last year, the banks supported win-win finance worth 2.1 trillion won, including interest cashback on loans for small business owners. Also, in December last year, about 20 commercial banks announced a 'banking sector financial support plan for small business owners,' focusing on extending loan repayment periods and easing interest burdens.

However, this time, the opposition party leader, also considered a major presidential candidate, has gone further by attempting to revise the additional interest rate calculation system, which is the banks' own authority. The Democratic Party proposed an amendment to the Banking Act that would prevent banks from including various insurance premiums and contributions, which they claim are statutory costs, in the additional interest rate and passing them on to borrowers. The banking sector has no choice but to reluctantly accept this.

An official from the banking sector lamented, "The financial industry is a regulated industry heavily influenced by authorities, so it is practically difficult to say 'No.' This year, the outlook for banking is not very bright, but the social role demanded of banks is increasing, making it very difficult."

The banks are truly surrounded on all sides and isolated. Political uncertainty has caused setbacks in the value-up efforts they have long worked on, and now they are forced to take on roles that the government should fulfill under the name of 'win-win finance.' Financial institution leaders have sent handwritten shareholder letters at the beginning of the new year and frequently held conference calls to convey messages that they will carry out their value-up plans without disruption. However, if they have to pay another 'windfall tax' this time, they might have to use funds that should be returned to shareholders. In other words, autonomy has disappeared, and only responsibility has increased.

Tomorrow (local time on the 20th), the second term of Trump officially begins. A faster and stronger Trump than in 2017 is coming. If the political sphere truly cares about people's livelihoods, what is needed first is strong internal unity to withstand the 'Trump storm,' rather than showy populist moves. Should we be tying sandbags to banks that are struggling hard?