[1mm Finance Talk] Why Did the FSC Vice Chairman Attend the Goshiwon Donation Ceremony?

FSC Calls in Secondary Financial Sector on July 30 to Review Social Contribution Status
Gyeonggi Province Launches Nation's First 'Air Conditioner Support Project'
Policy Designed by President Lee During His Tenure as Gyeonggi Governor
Applications Surge Every Year, but Financial Constraints Remain
FSC Attends Korea Federation of Banks' Air Conditioner Donation Ceremony
Move Seen as Encouragement for Social Contribution Activities Related to Climate Response

Daeyoung Kwon, Vice Chairman of the Financial Services Commission (second from left), attended the 'Donation Ceremony for Overcoming the Climate Crisis of Residents in Ggokbang by the Banking Sector in Preparation for the Heatwave,' hosted by the Korea Federation of Banks, at the Seoul Station Ggokbang Counseling Center in Yongsan-gu, Seoul, on the morning of the 5th, and posed for a commemorative photo. FSC

"We will continue to discuss ways for the entire financial sector to actively participate in projects that share energy with vulnerable groups."

This was stated by Daeyoung Kwon, Vice Chairman of the Financial Services Commission, during his visit to the Seoul Station Ggokbang Counseling Center, operated by the Seoul Metropolitan Government in Yongsan-gu, Seoul, on the 5th. The occasion was a ceremony in which the Korea Federation of Banks donated 500 million won to the National Ggokbang Counseling Center Council to support residents of Ggokbang neighborhoods suffering from the heatwave.

What drew particular attention was the presence of the attendees. Both Yongbyung Cho, Chairman of the Korea Federation of Banks, and Vice Chairman Kwon attended the event together. It is extremely rare for a vice chairman of the FSC, a position equivalent to vice minister, to attend a donation ceremony in the financial sector. The FSC even distributed a separate press release and photos of the event, indicating that Vice Chairman Kwon's attendance was not a casual gesture.

Why did Vice Chairman Kwon attend the donation ceremony of the Korea Federation of Banks? The FSC convened financial sector officials on July 30 to review the current status of social contribution activities. It was reported that the FSC checked whether there are any social contribution projects being jointly promoted by the financial sector. As early as next week, officials from the secondary financial sector are expected to gather to discuss potential joint social contribution initiatives.

This is not the first time the FSC has reviewed the social contribution activities of financial companies. In 2023, the FSC held a working group on improving management, business practices, and systems in the banking sector, and discussed ways to invigorate social contribution. At that time, the status of social contribution by domestic banks was also shared.

However, there is a difference. Two years ago, discussions focused on activating social contribution by publicly disclosing and comparing the activities of banks. Now, the FSC is said to be requesting that the financial sector continue 'social contribution related to climate crisis response.' Reflecting this, the Korea Federation of Banks and the Korea Life Insurance Association have successively issued press releases detailing support for air conditioners in Ggokbang neighborhoods and similar initiatives.

The reason the FSC is closely examining the social contribution activities of financial companies is due to criticism of 'profiteering from interest.' Despite the economic downturn, the four major financial holding companies recorded their highest-ever earnings in the first half of the year. In response, the FSC has been calling on the financial sector to expand their social contribution activities.

Recently, with the launch of the new administration, the FSC has shown increased interest in social contribution related to 'vulnerable groups' and 'energy.' This is a long-standing concern of President Jaemyung Lee and also a key policy of the new government.

On July 9, Prime Minister Minseok Kim visited the Daejeon Ggokbang Counseling Center in Dong-gu, Daejeon, to inspect the protection measures for vulnerable housing groups during the heatwave. While it has been common for the Prime Minister to visit Ggokbang neighborhoods in Seoul, this was the first time a Prime Minister traveled to a provincial area to directly check on the living conditions in such neighborhoods.

The next day, President Lee also instructed during a senior aides' meeting to mobilize all available administrative resources to prepare measures for vulnerable groups and farming and fishing households affected by the heatwave. Last week, he reiterated that "the heatwave is a national emergency," emphasizing once again the need to minimize damage.

Vice Chairman Kwon's attendance at the Korea Federation of Banks' air conditioner donation ceremony for Ggokbang neighborhoods is interpreted as a reaffirmation of this message to the financial sector. The fact that the event focused on social contribution through air conditioner support also stands out.

Gyeonggi Province was the first in the country to launch an 'air conditioner installation support project for vulnerable groups.' This project was initiated as part of an energy welfare policy proposed by President Lee during his tenure as governor of Gyeonggi Province. The air conditioner installation support project for vulnerable groups is so popular that applications flood in every year. As the climate crisis has led to increasingly frequent and severe heatwaves, air conditioners have become a necessity. The policy's effectiveness was further enhanced by the fact that local governments had previously focused mainly on supporting vulnerable groups during cold spells.

After taking office, Gyeonggi Province Governor Dongyeon Kim expanded the eligibility for air conditioner installation support from elderly households to include basic livelihood security recipients and the near-poor. At the time, President Lee publicly stated that the air conditioner support project should be expanded nationwide.

However, there are limits to expanding the project using only local government funds. By attending the air conditioner donation ceremony, the FSC has effectively indicated the direction for financial companies' social contribution activities.

Starting this year, it is expected that financial companies will become more active in supporting cooling appliances for vulnerable groups. Like local governments, financial companies have so far focused mainly on providing heating appliances during cold spells, but there is now a shift toward supporting cooling appliances during heatwaves and addressing housing welfare.

An official from the financial sector said, "The most representative group in need is the residents of Ggokbang neighborhoods, so we are considering social contribution projects related to the climate crisis," adding, "Since the FSC is not forcing us, we plan to continue making donations as we have been, without overextending ourselves."