Business calls for stricter regulation of troubled savings banks: survey

Most businessmen and economic experts demand that regulations on insolvent savings banks’ restructuring be made stricter, according to a survey released by the Korea Chamber of Commerce and Industry on Thursday.

In the poll of about 150 businessmen and analysts, 47.1 percent of the respondents said that previous regulations failed to prevent the savings banks’ risky management. About 34 percent demanded more measures to aid victims.

Such sentiments come after Solomon, Mirae II, Hanju and Korea savings banks were suspended for financial difficulties, causing corporate and individual customers to face unexpected losses.

“Numerous companies consider the recent restructure merely as a hasty first-aid to get rid of a couple insolvent savings banks,” KCCI said. “And we need to identify more details on the victimized companies.”

The participants of the survey estimated that the fall of these banks will affect the construction industry the most, followed by the real estate, finance, manufacturing and service areas.

About 43 percent of the participants also stated that the insolvency issue is likely to lead to a merger of savings banks; 40 percent expected that more savings banks will end up insolvent.

Stricter supervision of capital and debt management is the most pressing agenda, 74.8 percent of the participants said. 13.5 percent answered that expansion through merger and acquisition is necessary. Only 3.9 percent called for loosening of the current regulation.

“We will have to restructure and strengthen the current regulatory system to prevent embezzlement and moral decay within the savings banks to regain trust from our citizens,” KCCI executive director Chun Su-bong said.

By Chung Joo-won (joowonc@heraldcorp.com)