Financial Authorities to Soon Begin Developing Disadvantage Measures for Companies Responsible for Major Industrial Accidents
The financial authorities have decided to develop concrete measures to impose disadvantages on companies responsible for major industrial accidents. Commercial banks, led by the Korea Federation of Banks, have also agreed to review related measures.
On August 1 at 2:00 p.m., the Financial Services Commission held a closed-door meeting with the Financial Supervisory Service, the Korea Federation of Banks, and credit officers from commercial banks to discuss management measures for companies involved in major industrial accidents. The meeting was convened to assess the internal regulations and current practices regarding corporate credit evaluations within the banking sector. This meeting followed the report by Financial Services Commission Chairman Kim Byunghwan to President Lee Jaemyung at the Cabinet meeting on July 29, where he stated that the commission would consider restricting loans to companies involved in major industrial accidents.
A commercial bank official explained, "Banks provided the Financial Services Commission with details on their loan review processes for companies involved in major industrial accidents," adding, "We agreed to further discuss possible ways to impose disadvantages on such companies, with the Korea Federation of Banks taking the lead."
Currently, commercial banks include non-financial factors in their qualitative evaluations of corporate credit. One of these non-financial indicators is the ESG (Environmental, Social, and Governance) score, which takes into account whether a company has a dedicated safety management organization. However, there is no direct evaluation specifically for companies that have experienced major industrial accidents. The Financial Services Commission has stated that it will develop more detailed measures after reflecting the banks' reviews.
The financial industry has pointed out that these measures require careful discussion. There is criticism that introducing a new penalty item for major industrial accidents, as mentioned by some, could become a unilateral regulation regardless of a company's repayment ability. Another commercial bank official stated, "Loan amounts and additional interest rates are determined by credit review," adding, "It would be difficult to directly affect interest rates or loan amounts solely because a major industrial accident occurred."
For this reason, there is speculation that the measures may first be applied to policy finance institutions before being expanded to commercial banks. An official from a state-run bank said, "State-run banks already reflect the CEO's risk (management risk item) in credit reviews," and added, "If a CEO is indicted due to a major industrial accident, we could consider reflecting this in the management risk assessment."
The Financial Services Commission plans to first prepare follow-up measures in line with the Ministry of Employment and Labor's policies. The Ministry of Employment and Labor is forming a task force directly under the minister and plans to soon hold an inter-ministerial meeting to prevent major industrial accidents.
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