SEOUL - In the latest editorial from the Korea Times, President Yoon Suk Yeol's criticisms of South Korea's major banks are highlighted amid concerns over household debt and lending practices.
According to Yonhap News Agency, the editorial published on November 3, the president has publicly denounced the country's largest banks on several occasions throughout the year for what he describes as exploitative lending practices. He likened the situation of small business owners and self-employed individuals to that of "servants" due to stringent lending terms, attributing much of these issues to the banks' oligopolistic nature. The banks have been accused of quickly increasing lending rates in response to hikes in the Bank of Korea's benchmark interest rate, yet being slow and partial to reflect rate cuts.
The commentary emphasizes the disparity between bank profits and the compensation of their employees, which averages over 100 million won annually, compared to the generous voluntary retirement packages that surpass the total severance pay in many other professions. Despite such prosperity, in times of financial crises, banks have historically been bailed out by government interventions funded by taxpayers.
The piece contends that while the president's condemnation resonates with the public, it should also be accompanied by concrete measures to reform the sector. Previous government actions, described as "financial co-prosperity plans," resulted in temporary relief but have raised questions about the role of government in influencing private business profits.
The editorial stresses that instead of ad-hoc, forceful tactics, the administration should ensure fair practices in interest rate settings, avoiding undue burden on borrowers and protecting depositors. It criticizes recent financial policies which, instead of adhering to global trends of financial prudence, have encouraged increased household debt through relaxed lending for housing, inadvertently contributing to the financial strain on households in the current high-interest environment.
Furthermore, it suggests that rather than resort to populist economic strategies, which come at a high cost, the government should address financial monopolies and oligopolies through systemic reforms, potentially including legislation mandating banks to reinvest a portion of their excess profits into financing for low-income families or proper ESG management for underfunded small businesses.
The Korea Times editorial concludes by advising the replacement of the head of the Financial Supervisory Service with a financial expert, rather than the current top financial regulator, a former prosecutor, to achieve lasting institutional change.