Meeting with Major Insurance Company CEOs on the 27th
Sequential Meetings with Securities and Card Sector Leaders
Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), will hold a series of meetings with CEOs of financial companies including banks, insurance, securities, and card companies. With only four months left before his term expires, attention is focused on what message Governor Lee, who still holds strong grip, will deliver.
According to the FSS on the 3rd, Governor Lee will hold a meeting with heads of commercial banks on the 19th. On the 27th, he will meet with CEOs of major insurance companies. Afterwards, meetings will be held in order with the securities and card sectors. The financial industry expects these meetings to be an opportunity to convey key issues by sector and share the supervisory direction of financial authorities.
The banking sector identifies household loans as a major issue. Previously, Kim Byung-hwan, Chairman of the Financial Services Commission, announced that the increase rate of household debt this year will be managed within the range of the potential growth rate. According to the government’s forecast, this year’s potential growth rate has dropped from 5.9% last year to 3.8%.
Governor Lee is expected to particularly mention the spread rate. Major financial holding companies are estimated to have recorded the largest-ever net profit in the fourth quarter of last year. It is evaluated that the spread rate played a significant role behind the strong performance. Bank loan interest rates are calculated by adding the spread rate to the base rate, and banks drove their performance by raising the spread rate.
In response, financial authorities are indirectly pressuring the banking sector to lower loan interest rates. At a financial situation review meeting last month, Governor Lee instructed, "Closely monitor the loan interest rate transmission channel and the trend of the spread rate so that households and companies can feel the effect of two interest rate cuts."
Chairman Kim also said at last month’s monthly press briefing, "It is now time for banks to reflect the part where the base interest rate has fallen."
Meanwhile, Governor Lee is scheduled to give opening remarks at the interim briefing on major financial holding companies and bank inspections at the FSS in the afternoon. He is expected to mention the issue of improper loans by Woori Bank at this event.
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