Legislators Meet Bank Heads

Legislators urge banks to help SMEs and financially poor people, now that the financial crisis is over

Members of the National Assembly National Policy Committee, led by Rep. Kim Young-son, met with heads of banks to urge them to prepare for the development of the finance industry following the overcoming of the financial crisis for the protection of financial consumers, financially poor SMEs and the general public. Chairman Kim of the Grand National Party announced the meeting to be held at a restaurant in Yeouido, Seoul, at 7 p.m. on Sept. 7, and a number of members of the committee’s legal deliberation section met with heads of banks led by Chairman Shin Dong-kyu of the Federation of Banks. Representatives from the banking sector included President Min Euoo-sung of the Korea Development Bank; President Yun Young-ro of the Industrial Bank of Korea; President Kang Chung-won of Kookmin Bank; President Lee Baek-soon of Shinhan Bank; President Kim Jung-tae of Hana Bank; and the heads of Kwangju Bank and the Credit Division of the National Agricultural Cooperatives Federation.
Chairwoman Kim said Korea has been able to overcome the global financial crisis about a year after it began with the help of the government, citizens, financial institutions and businesses. In the days ahead, she urged banks to pay more attention to struggling SMEs, the general public and the protection of the rights of financial consumers.
She also said banks should draw up measures to improve the livelihood of the people and the development of the financial industry after finding the causes of the financial crisis. In the meantime, Chairman Shin of the Federation of Banks said many bank customers have been angry about the suspension of tax benefits for long-term housing savings. He told reporters at a meeting that the federation asked the Ministry of Strategy and Finance to reconsider the matter and they are studying the request, the chairman said.
He went on to say that a “bad bank,” to be formed by commercial banks, would expand its scale of funds through borrowing, the issuance of bonds or investments by third parties. It will set up a management committee made up of outside people to secure its independent operation and neutrality and sell bad debts in an open manner, the chairman added. Shin also noted that it is unfair to charge fees on ATMs owned by banks that have 48,000 units or securities firms that own 500. He said there ought to be a way to segregate the fees by the number of ATMs owned and operated by financial institutions. The FOB chairman said there would be positive results from negotiations on salary payback between banks and unions, with Kookmin and Shinhan Banks already succeeding in getting their individual unions to agree on the matter. There is, however, a difference in legal opinion whether or not individual unions can directly hold talks with management separately from industry unions. He also warned the banks to be ready to cope with any operational problems caused by impacts from the economic crisis, as it has not yet fully subsided, although many indicators showed improvement lately. They must extract extra income from non-banking businesses such as service fees.
The chairman also said he is concerned with the recent moves by the financial authorities to tax derivative products and regulate the derivative products transacted outside the bourse, because when such moves are implemented, it would slow down the derivatives market. He said he submitted the concern to the National Assembly to let the legislators know that it won’t be too late to take actions after seeing the examples of how foreign countries dealt with the matter.
He also said they ought to rethink allowing securities and insurance firms to handle funds for customers in terms of the financial industry as a whole, as it has never been done anywhere else in the world except Korea.
Chairman Chin Dong-soo of the Financial Services Commission said he will explain to the legislators the negative aspects of charging a tax on derivative products. Rep. Lee Hye-hoon submitted the legislative proposal to tax derivative financial products, including futures, by amending the current securities transaction tax law. nw

In this photo are Rep. Kim Young-sun, chairman of the National Assembly National Policy Committee, 5th L, Chairman Shin Dong-kyu of the Federation of Banks, 4th R, Gov. Min Euoo-sung of Korea Development Bank, President Kang Chung-won of Kookmin Bank, President Lee Baek-soon of Shinhan Bank, President Kim Jung-tae of Hana Bank, President Lee Chong-hwi of Woori Bank, President Yun Yong-ro of the Industrial Bank of Korea, President Kim Tae-yong of NH Finance and Insurance Division, President Song Ka-jin of Kwangju Bank. This photo was taken after a meeting of members of the National Assembly Political Affairs Committee at a restaurant at the 63 Building in Yeouido, Seoul on Sept. 7.