Financial regulators are poised to launch a full-fledged probe into banks’ lending practices amid snowballing household debt in close coordination with the Bank of Korea.

Financial Supervisory Service Gov. Kwon Hyouk-se expressed his resolve for the joint inspection amid the critical level of the debt held by households at a press conference on Monday.

“I believe the household debt issue cannot be resolved through only regulations by financial authorities,” he said. “While the FSS takes countermeasures, the BOK could take preemptive measures.”

Top regulator Kwon said he instructed his staff to closely collaborate with the central bank in the coming probe.

Last week, the BOK called for the FSS to conduct a joint probe into the household debt situation.

“The purpose of the joint investigation is to collect information needed to establish monetary policy including financial stability,” the central bank said.

The FSS and BOK are expected to review commercial banks’ lending practices and loan details in connection with households and small and medium-sized enterprises.

As for household debt, the central bank intends to identify current situations in more detail based on debt size, repayment methods, income levels and age of borrowers.

He also commented on two major foreign banks ― Citibank Korea and Standard Chartered Bank Korea.

“Citibank and Standard Chartered are operating in the local market,” he said. “It is not desirable to be passive in social contribution activities and financing to lower-income brackets.”

Kwon, who took office as the chief regulator one year ago, has prioritized protection of financial consumers.

By Kim Yon-se (kys@heraldcorp.com)