[1mm Finance Talk] "We Are Being Ignored"... Savings Banks Overlooked Again During National Assembly Audit

While Most Financial Firms Feel Relieved to Avoid Audits,
Savings Banks Are the Exception?No Policy Hopes in Sight
Expectations for Easing M&A Regulations Also Unlikely for Now

The savings bank industry expressed disappointment after receiving no policy-related questions during the audit of the Financial Services Commission by the National Assembly's Political Affairs Committee. While most financial institutions tend to feel nervous when mentioned during the audit, the savings bank sector is an exception, as it clearly desires more attention. However, once again being overlooked during this year's audit, the industry responded with frustration, noting that not only have long-standing issues such as the easing of M&A regulations and improvements to mandatory lending ratios in business districts been ignored, but even its fundamental role of supplying regional finance has fallen out of the political spotlight.

Lee Okwon, Chairman of the Financial Services Commission, is taking an oath at the National Assembly's Political Affairs Committee during the audit of the Financial Services Commission and others on October 20, 2025. Photo by Kim Hyunmin

During the Political Affairs Committee audit held on October 20, there were no questions related to the savings bank sector, either in the on-site inquiries or in the Financial Services Commission's pre-distributed "work status report." The work status report included the results of handling 79 corrective actions requested by the National Assembly over the past year since the last audit, as well as future plans, but not a single item related to savings banks was included.

This stands in contrast to other secondary financial sectors, which were at least mentioned, such as insurance (6 cases), lending businesses and illegal private finance (2 cases), NPL processing institutions (UAMCO, 1 case), credit cards (1 case), electronic payment gateways (PG, 1 case), prepaid electronic payment instruments (gift certificates, 1 case), mutual finance (1 case), and post offices (1 case). Although there were general requests applicable to all financial sectors, such as ▲raising the deposit protection limit and ▲increasing the provisioning standards for real estate project financing (PF) bad debt, there were no items specifically related to savings bank policies.

During the session, Assemblyman Park Chan-dae of the Democratic Party of Korea and Assemblyman Kim Sanghoon of the People Power Party made indirect references to savings banks, but did not raise any direct policy-related issues. Assemblyman Park pointed out to Financial Services Commission Chairman Lee Okwon that "improvements to the audit system are necessary to prevent a recurrence of the Busan Savings Bank Cambodia investment incident," while Assemblyman Kim stated, "To prevent the bankruptcy of lending companies, management of non-performing loans (NPLs) must be strengthened," adding that "NPL problems could also affect the soundness of savings banks."

The industry lamented that issues concerning the sector have been neglected for several years during the audit. The last time a savings bank-related question drew national attention was in 2016, when former Assemblywoman Je Yoonkyung of the Democratic Party of Korea (currently the Special Assistant to the Speaker of the National Assembly for Public Welfare) summoned Im Jingu, President of SBI Savings Bank, to ask about the cancellation of matured bonds. In 2019, Je also raised concerns about Hanbit Lending's purchase of credit recovery bonds, but since then, related questions have all but disappeared. Industry insiders complained, "There are no longer any lawmakers or aides looking out for the savings banks."

The industry also feels marginalized in its core role of supplying regional finance. While the Financial Services Commission's work status report included support measures to strengthen the existence of regional banks, savings banks were not mentioned. The Financial Services Commission explained, "We introduced a regional reinvestment evaluation system to be used as a criterion for selecting local government treasuries, and expanded financial intermediary support loans to assist regional bank operations."

The industry took it especially seriously that there were no questions on the sector even during the Financial Services Commission audit, which is typically focused on policy review. Even putting aside promotional policies such as the relaxation of M&A regulations or mandatory lending ratio requirements in business districts, the industry had at least expected a basic review of issues such as the activation of the Korea Federation of Savings Banks' NPL subsidiaries, but these were not mentioned at all. An industry official commented, "When I moved to the industry 10 years ago, it felt strange not to hear savings banks mentioned during the audit, but now I've resigned myself to it," adding, "Setting the agenda for the audit is the exclusive right of the National Assembly, but this may also be the result of the federation and industry's weak lobbying capabilities and insufficient communication between the financial authorities and the National Assembly."