Lee Bok-hyun "Disappointed with CEO Appointment Process... Efforts Needed to Establish Governance"

FSS Governor and Bank Presidents Hold Meeting

Financial Supervisory Service Governor Lee Bok-hyun, Korea Federation of Banks Chairman Cho Yong-byeong, and other financial holding company chairmen are attending a business agreement ceremony for fostering and strengthening the capabilities of outside directors among the Financial Supervisory Service, Korea Institute of Financial Training, Korea Federation of Banks, and financial holding companies at the Korea Institute of Financial Training in Samcheong-dong, Seoul on February 13, 2025. Photo by Jo Yong-jun

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), said on the 19th, "Looking at recent controversies over the appointment process of bank CEOs and cases of insufficient board oversight, there remain regrets in the actual operational process."

At the 'Meeting between the FSS Governor and Bank Presidents' held at the Korea Federation of Banks in Seoul that morning, Governor Lee said, "I ask banks to make further efforts to establish sound and advanced governance structures tailored to their respective characteristics."

He also stated, "To continuously enhance shareholder value, securing the financial soundness of banks must be a prerequisite," and added, "Please appropriately balance capital adequacy management, such as securing loss absorption capacity, and autonomous shareholder returns."

In particular, he urged thorough management of risks arising from the concentration of assets and products in the mid to long term. Last year, concerns about household debt concentration arose due to expectations of interest rate cuts and rising housing prices, but stable trends have been maintained through the autonomous management efforts of the banking sector.

Governor Lee emphasized, "This year as well, please continue to cooperate so that household debt is managed within the nominal economic growth rate (3.8%) and that the practice of repayment ability assessment, including the implementation of the three-stage stress test on the Debt Service Ratio (DSR), can be established."

He also mentioned organizational culture reform to strengthen practical internal controls. This was based on the judgment that failures in internal controls within the banking sector and the resulting large-scale financial accidents are recurring.

Governor Lee said, "Even recently, witnessing the recurrence of large-scale financial accidents involving senior management, I deeply realize that qualitative improvement of internal controls is very difficult," adding, "I ask management to boldly reform organizational culture, implement effective internal controls, and take the lead in managing IT risks that are increasing due to rapid technological advancements."

Additionally, he requested uninterrupted funding supply to medium- and low-credit borrowers and small business owners. So far, the FSS has cooperated with the banking sector to alleviate the burden on ordinary citizens through maturity extensions and repayment deferrals, and has continuously provided financial support amounting to 1.4 trillion won.

Governor Lee added, "Considering the role of banks as financial intermediaries, please ensure that funding supply to local small and medium-sized enterprises and small business owners continues without disruption, and pay close attention to other support measures such as debt adjustment for vulnerable groups."