The chief regulatory official called for the nation’s financial industry to scrap its conventional business methods, still focused mainly on domestic consumers.

Korea’s major financial firms have been excessively dependent upon interest income, said Financial Supervisory Service governor Choi Soo-hyun in his meeting with the chiefs of seven major financial groups on Thursday.

“They are lagging far behind global financial groups,” Choi said. “It is necessary to drop the past operating methods and carry out management-revamping amid the low-interest and low-growth era.”

Commenting on the saturated domestic market, Choi advised the financial chiefs to tap overseas countries.

“The FSS will seek to ease regulations for firms’ overseas advancement and support business approval in the overseas market through close coordination with local supervisory agencies there,” he told the participants.

Choi also proposed that financial leaders set up a task force, comprised of regulatory officials, bankers and private experts, to overhaul a variety of systems in major financial groups such as KB, Woori, Shinhan and Hana.

The Financial Services Commission, the decision-making body of the FSS, has previously pledged to revamp the governance structure of major financial groups.

Although a system putting financial firms under management of their parent financial holding companies was introduced 12 years ago, it has yielded many problems, said senior FSC officials.

Financial regulators from the FSC and FSS are set to conduct a close inquiry into their current management systems.

FSC chairman Shin Je-yoon earlier said that financial firms should not gloss over the fact that taxpayers’ money totaling 168 trillion won ($154 billion) bailed out the financial industry, hit by the 1997 financial crisis.

Shin had called for the industry to widen corporate social responsibility and put more focus on consumer protection by enhancing internal audits into irregular business practices.

Shin said he planned to recommend the replacement of incumbent executives at state-run financial firms to President Park Geun-hye, irrespective of their terms.

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