Cho Yong-byoung, the head of the Korea Federation of Banks (KFB), expressed regret over recent controversies surrounding massive consumer losses linked to equity-linked securities (ELS) tied to the Hang Seng China Enterprises Index. During a press conference on Monday, he pledged to bolster internal controls within the banking industry and enhance collaboration among stakeholders, including financial authorities and customers, to facilitate smooth resolutions.
Reflecting on his own experience, Cho acknowledged the challenges and self-reflection stemming from his involvement in the private equity funds incident during his tenure at Shinhan Financial Group. He expressed remorse for the recurrence of similar incidents, particularly following the enactment of the Financial Consumer Protection Act.
Furthermore, Cho emphasized the potential for these challenges to spur growth in the banking sector and capital markets. He committed the KFB to concerted efforts aimed at solidifying the structure and implementation of internal controls within banks.
Highlighting the 2021 case involving significant investor losses due to mismanagement by investment entities like Optimus Asset Management, Cho underscored the importance of the Financial Consumer Protection Act enacted in response to such incidents.
In response to the Financial Supervisory Service’s announcement regarding bank compensation guidelines, Cho Yong-byoung underscored the need for ongoing discussions, acknowledging that this marks just the initial phase of deliberations.
Looking ahead, Cho expressed his intention to engage in dialogue with regulatory authorities and banks, addressing both industry-wide concerns and specific issues affecting individual banks.
Addressing criticisms regarding the offering of high-risk products by the banking industry, Cho emphasized the importance of advancing asset management capabilities rather than focusing solely on the presence of such products. He advocated for a broader array of options for customers in asset management, emphasizing the need to avoid undue limitations in this regard.
Furthermore, Cho outlined his objectives for expanding the scope of the banking industry’s operations. Despite initial expectations for the banking sector’s role at the start of the year, profitability outlook remains subdued, prompting a cautious approach in business strategies. Moving forward, Cho aims to foster discussions on expanding banks into non-financial sectors and enhancing synergies among subsidiaries within financial groups.