[Q&A] Kim Byunghwan: "'Local DSR Relaxation' Is Not an Appropriate Measure at This Time"

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Kim Byung-hwan, Chairman of the Financial Services Commission, is speaking about recent financial issues at the monthly press briefing held at the Government Seoul Office in Jongno-gu, Seoul on the 24th. 2025.2.24 Photo by Jo Yong-jun

Kim Byung-hwan, Chairman of the Financial Services Commission, stated on the 24th regarding demands to ease the total debt service ratio (DSR) regulations related to unsold housing in provincial areas, "From the perspective of policy credibility and effectiveness, this is not an appropriate measure at this time."

At a monthly press briefing held at the Government Complex Seoul that morning, Chairman Kim said, "We have fully considered the need to allocate a bit more financial resources to provincial areas in the overall allocation process and have formulated measures accordingly."

Chairman Kim explained, "The accumulation of unsold housing in provincial areas is due to a complex interplay of factors, including supply exceeding demand. I believe that easing financial regulations alone cannot completely resolve this issue."

Below is a Q&A session with Chairman Kim.

- The Bank of Korea has lowered the base interest rate to stimulate the economy. What are your thoughts on the controversy over banks profiting from interest rates amid this?

▲ It is fundamentally important to reflect the base interest rate cut in the market. However, there is a time lag. Now is the time for it to be reflected. Some banks have already taken measures to reduce the additional interest rates. Loan interest rates are prices, and it is not appropriate for financial authorities to intervene strongly and directly. However, since loan interest rates are prices, market principles must operate.

- Last week, the government ministries jointly announced measures to stabilize the construction market. There is skepticism about whether incentives in household debt management effectively revive provincial economies. What is your opinion on this?

▲ The increase in unsold housing in provincial areas is due to a complex combination of high sale prices, oversupply, and lack of demand. It is necessary to explore measures where finance can play a role. However, this problem cannot be completely resolved through financial regulation easing.

There have been demands to ease DSR regulations on provincial real estate. Considering the credibility and effectiveness of current policies, it does not seem to be an appropriate measure. However, regarding the overall scale of household loan growth this year, it is judged that supplying funds to provincial areas rather than the metropolitan area is appropriate. Measures have been formulated considering the overall allocation of financial resources while sufficiently securing soundness through systems such as DSR.

- The Financial Services Commission will make the final decision on whether Woori Financial Group acquires an insurance company. What is the progress?

▲ The Financial Supervisory Service is currently calculating the management evaluation grade. Once the results are received, the review will proceed. The schedule is not yet clear. Also, when the review is conducted, the time required to request additional materials is excluded from the approval period. It is difficult to predict when approval will be granted.

- There are concerns that Apple Pay fees may be passed on to consumers.

▲ When the Financial Services Commission reviewed and approved Apple Pay in 2023, conditions were attached to prevent fees from being passed on to merchants or consumers. It is difficult for financial authorities to intervene in how Apple Pay and card companies set fees. Ultimately, this will indirectly reduce consumer benefits, and card companies must judge and decide on this. We will continue to closely monitor the impact on the market. If the situation expands to require a change in the authorities' stance, we will consider intervention.

- It was announced that the metropolitan area’s jeonse (lease deposit) guarantee ratio will be lowered to below 90%. Is there any progress?

▲ We need to observe market conditions, so a decision will be made around April or May.

- Will highly competitive industries such as steel be included in the advanced industry fund support targets?

▲ The support targets are currently under inter-ministerial consultation. The Advanced Strategic Industry Fund was created to broadly support areas where existing support methods have limitations, insufficiencies, or constraints amid fierce global competition. However, we must carefully consider where to prioritize the limited resources. The government plan will be finalized and announced in March.

- Regarding Samsung Life Insurance’s application to incorporate Samsung Fire & Marine Insurance as a subsidiary, some have called it the "paradox of value-up." Do you think there are institutional aspects that need to be reviewed?

▲ Samsung Electronics’ purchase of its own shares raises issues related to the Separation of Banking and Commerce Act. This act has been operated amid much controversy. Therefore, we do not see the need to change the system just because of the value-up. However, Samsung Life Insurance and Samsung Fire & Marine Insurance involve holding shares in financial companies, which is somewhat different from the principles of the Separation of Banking and Commerce. We believe there is room for flexible approaches in operating the system.

- Can the amendment to the Korea Development Bank Act regarding the increase of authorized capital be completed in the first half of the year?

▲ There is a shared understanding of the need to increase authorized capital. The Korea Development Bank will need to receive more capital contributions in the future, and lawmakers also recognize that the law should not be a constraint. We will work hard aiming for the first half of the year.

- How do you view the ongoing strong confrontation between the Deposit Insurance Corporation and the labor union regarding MG Insurance?

▲ The sale process has been ongoing for a long time. Since there are not many options left, I hope both sides negotiate with a truly desperate mindset. We are watching with the position that it should not be delayed too much.

- Will a change in administration affect the reform plan for indemnity insurance?

▲ Once the Medical Reform Special Committee convenes, the indemnity insurance reform plan will be finalized and announced. Although the political schedule is uncertain, there is considerable consensus that this reform must proceed. The overall framework should be promoted and I believe it will be.