Senior financial regulatory officials expressed opposition to the presidential candidates’ election campaign pledges to overhaul the financial supervisory structure.
The opponents include the top two officials ― Financial Services Commission chairman Kim Seok-dong and Financial Supervisory Service governor Kwon Hyouk-se.
Aside from the political sector, many college professors and economists have continued to express skeptical views over the nation’s regulatory structure and system.
“Korea ranked 52nd out of 55 countries in the financial regulatory sector, assessed by the International Monetary Fund,” Yonsei University professor Kim Hong-ki said at a recent forum on the future direction of the financial supervisory system.
He stressed that the IMF’s evaluation ranking shows that Korea’s government has had too much power and engages in excessive market intervention.
Korea University professor Oh Jung-keun said, “The Financial Services Commission has abused its monopolistic authority both in financial policies and regulations (as the senior entity of the Financial Supervisory Service).”
Currently, the FSC, composed of public officials, has the overall decision-making authority while the FSS, whose staff are mostly non-public servants, takes on the function of investigating financial firms.
While the details to revamp the structure are different among economists and the presidential candidates, a growing voice is calling to scale down the authority held by the FSC.
But FSC chairman Kim refuted the idea, saying that “the present financial administrative structure coped with the global financial crisis effectively.”
His remarks come a few days after some economists raised the necessity of abolishing the FSC and absorbing the government entity within the Finance Ministry.
FSS Gov. Kwon said he is opposed to the idea separating the consumer protection function from the supervisory function, saying that “integration of the two functions (like the current system) is more effective as the two cannot exist independently.”
But Kwon has not made public his view on the idea of eliminating the FSC. Though Kwon works as chief of the FSS, he, originally a public servant, has served mostly for the government including the FSC.
Last year, the FSC came under criticism for apparently pressuring major financial groups to take over distressed savings banks.
Bankers expressed skepticism over the financial authorities’ move after it unveiled plans to put ailing savings banks up for auction and suspend operations at some unviable institutions.
They are concerned that banking groups could see their financial soundness weaken and their brand value deteriorate with the planned acquisitions.
“It seems that several financial groups agreed to the takeover scheme against their will,” said a senior official of a major commercial bank.
Concerning the reported willingness of Woori Financial Group and Hana Financial Group to acquire savings banks, he said, “In effect, they could not afford to purchase a company.”
Even an official of the FSS, an executive arm of the FSC, expressed misgivings about driving financial groups into rescuing troubled savings banks.
Asking not to be named, the official said, “It is undeniable that asset soundness and brand image of financial groups could be undermined with the acquisition of the secondary banks.”
By Kim Yon-se (
kys@heraldcorp.com)
