[Exclusive] Oh Hwakyung, Savings Bank Chairman, "Much to Do in PF Trading and Microfinance"

Expresses Determination in Phone Interview: "There Is Much Work to Be Done"
Industry Voices: "Worsening Conditions, Chairman Election Needed Quickly... Support for Reappointment"

Oh Hwa-kyung, Chairman of the Korea Federation of Savings Banks, expressed his determination, stating that there are many "tasks" (current issues) to be addressed, including real estate project financing (PF) sales and financial support for small business owners and self-employed individuals. As Oh's term ends on the 16th of next month, the election for his successor (the 20th chairman), as well as the appointments of auditors and executive directors, are progressing slowly, with an industry sentiment emerging in favor of Oh’s reappointment. The reason for the slower communication between financial authorities and the Federation’s board compared to previous elections is largely seen as the authorities not recommending clear candidates to the Federation’s board.

Oh Hwa-kyung, President of the Korea Federation of Savings Banks. At the time, he was being interviewed by Asia Economy at the Hana Financial Group Gangnam Building in Gangnam-gu, Seoul. Photo by Jang Jin-hyung aymsdream@

On the 25th, Chairman Oh said in a phone interview with this publication, "There are industry challenges, and there is much that has been done and much that still needs to be done." When asked whether the most important role for the next chairman is resolving long-standing industry issues such as adjusting deposit insurance premium rates or managing current issues like PF, he replied, "First is the issue of selling non-performing assets related to PF and bridge loans to the market, and second is the part where we need to provide some level of supply related to financial services for ordinary citizens (such as mid-interest loans)." He added, "The deposit insurance premium rate issue reflects accumulated results since the savings bank crisis, so it is a matter that the authorities need to decide on policy-wise."

Within the industry, the fact that no chairman candidates have even been rumored three weeks before the term expires is seen as a serious problem. Voices supporting Oh’s reappointment are also heard. During his three-year term as the 19th chairman, Oh is evaluated as having focused more on resolving current issues such as blocking the risk of bank runs related to real estate PF rather than pushing through major "promotion policies" like lowering deposit insurance premium rates or resolving polarization among savings banks. Meanwhile, he is also credited with somewhat fulfilling pledges such as supporting mergers and acquisitions (M&A) and promoting digital transformation (DX) of savings banks.

A representative from a Seoul-based savings bank said, "Unlike normal times, the industry is currently not in a good condition due to PF risks and others," adding, "Whether the chairman is from the public or private sector, or whether Oh is reappointed, it is time to quickly elect a chairman to solve the industry's challenges."

Currently, the dominant view is that the appointment of the 20th chairman before Oh’s term expires is unlikely. According to investigations with financial authorities, the Federation, and the industry, as of this day, no movement has been detected to hold an extraordinary general meeting, which is necessary for forming the Federation’s Election Commission and Chairman Recommendation Committee. It is reported that there is no acceleration in board communication regarding Oh’s reappointment, no recommendation of chairman candidates from financial authorities, and no collection of candidates from the industry. Not only the next chairman election but also the usual appointments of new executive directors and auditors, typically recommended by the Financial Supervisory Service, are also sluggish.

According to the Federation, once the board resolves to organize the Election Commission and Recommendation Committee, the Recommendation Committee selects the final candidates. The committee screens suitable applicants. Usually, during this process, financial authorities recommend suitable candidates to the board. After hearing opinions from the authorities and the industry, the Recommendation Committee receives written materials from candidates and, if necessary, conducts interviews before recommending one or multiple candidates for the next chairman. This process takes at least one month (30 days). This means it is unlikely the procedure will be completed by the 16th of next month. Because of this, voices from the industry are heard hoping that the financial authorities would quickly recommend candidates to the Federation’s board.

A senior Federation official said, "Even if the Election Commission and Recommendation Committee expedite the extraordinary general meeting procedures, it takes at least 30 days from screening candidates to announcing applicants, so it is practically difficult to appoint the 20th chairman immediately after Oh’s term expires."

The Federation is a nonprofit special corporation established under Article 25 of the Mutual Savings Banks Act, performing public interest tasks such as supporting vulnerable and delinquent borrowers and consulting for self-employed individuals. A financial authority official said, "The Federation is a nonprofit corporation under the Savings Banks Act, so the chairman election is something the Federation handles on its own, but nothing is done entirely on its own in the world," adding, "While the Financial Supervisory Service handles inspection work, since the Financial Services Commission usually oversees guidance and supervision, the voice of the financial authorities’ department in charge (the Department of Small and Medium Finance) will play an important role."

The Financial Services Commission drew a line, stating that it does not directly intervene in elections due to conflicts of interest and other issues. A Commission official said, "Neither the Korea Federation of Savings Banks nor any financial industry association chairman elections involve direct intervention by the practical departments."