The Korea Herald

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Banks face heavy sanctions for irregular lending

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Published : March 8, 2012 - 17:56

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Chief regulator says it is time for households to cut spending

The nation’s top financial regulator has vowed stern punitive action against banks engaged in irregular lending practices.

Since he took office as chief of the Financial Supervisory Service on March 27, 2011, Gov. Kwon Hyouk-se has taken the initiative in conducting intensive inquiries into major banks for alleged business irregularities.

The regulator’s full-fledged probe has been focused on the allegation that banks urged many individual and corporate customers to purchase insurance products or investment funds in exchange for issuing loans.

Gov. Kwon reiterated the “new legal grounds to crack down on the practices and issue sanctions on rule-violators” during a recent interview with The Korea Herald in his office in Yeouido, Seoul.

If a bank is negligent in enhancing financial soundness, the bank could expect regulators’ flexibility as long as the situation does not harm consumers, he said.

“But their irregular loan issuances produce victims. We cannot tolerate the practices in terms of protection of financial consumers,” he said.

Due to the irregular lending, many borrowers saw losses from investing in high-risk funds or suffer from the burden of paying unnecessary insurance premiums, according to supervisory officials.

“It seems that financial companies -- both Korean and foreign ones operating here -- have enjoyed easy sales (thanks to the improper lending),” he said.

“But the lenders which keep on doing so-called easy business with little cost will have to pay huge cost including a variety of sanctions,” he said.

Apart from levying fines on rule-violating banks, the FSS, in collaboration with investigative agencies, plans to seek imprisonment for bank employees who urge customers to buy other financial products in exchange for issuing loans.

Formerly, those engaged in the practice had been subject to fines at a maximum of 50 million won ($44,000).

But under revised laws, those involved could face fines of up to 100 million won or criminal punishment -- imprisonment for up to three years.

An FSS task force conducted inquiries on eight banks between July and September in 2011 and the regulator carried out periodical probes of two commercial banks.

The 10 banks are Woori, Shinhan, Hana, Busan, Jeju, Citibank Korea, Standard Chartered Bank Korea, Industrial Bank of Korea, NH Bank and the National Federation of Fisheries Cooperatives.

It is uncertain whether the law revisions will be retrospective.

Concerning snowballing household debt, Kwon said “individuals should tighten their belts” to resolve the problem.

“There is a policy limit in resolving the household debt,” he said. “Now it’s time for each household to reduce spending in three sectors -- housing, education and telecommunications.”

He described the situation of more borrowers resorting to private lenders in the wake of regulators’ tighter control of commercial banks’ lending as a “dilemma.”

To prevent a great number of consumers from suffering high interest rates charged by private lenders and the secondary banks, the FSS plans to widen the scope of government-led micro loans with lower rates for the underprivileged, he said.

The top regulator went on to say that restructuring of the debt-saddled savings banking industry will still be the primary policy-direction for the FSS this year.

“I would liken inducing a soft landing of savings banks to solving a higher-degree equation,” he said.

But Kwon did not confirm the speculation that several more troubled players will be subject to business suspension in one or two months.

The FSS will determine its future measures on a group of savings banks after reviewing their yearly financial statements that usually are calculated in February or March, he added.

Regarding the macro economy, Kwon said regulatory officials usually set guidelines for financial companies, bearing the worst scenario in mind.

“As we cope with the worst scenario, I believe foreign rating agencies assess them (Korea’s regulatory policies) positively,” he said.

Born in 1956 in Daegu, he graduated from Seoul National University and passed the Public Administration Examination in 1980.

He formerly worked as vice chairman of the Financial Services Commission, the decision-making panel of the FSS, and a director general of the Finance Ministry.

By Kim Yon-se and Cynthia J. Kim

(kys@heraldcorp.com)
(cynthiak@heraldcorp.com)

 

<한글 기사>

금감원장, “은행들 그간 쉽게 돈 벌어”

금융당국이 일명 꺾기(구속성 예금) 관행을 일삼아 온 은행들을 엄중 처벌할 방침이다.

권혁세 금융감독원장은 은행들이 대출의 조건으로 소비자에게 펀드나 보험상품 가입을 강요하고 있다며 “과태료 부과 등 강력히 처벌하겠다”고 코리아헤럴드와의 인터뷰에서 말했다.

권 원장은 “국내 금융회사든 외국계든 영업을 쉽게 했다고 볼 수 있다. 금융회사들이 이제 철저히 대비하지 않으면 여러가지 처분을 받게 될 것”이라고 경고했다.

그는 또 “각종 소비자단체로부터의 소송도 잇따를 수 있다”며 “금융회사들이 소위 쉽게 영업하다간 엄청난 코스트를 감내해야 할 것”이라고 말했다.

오는 3월27일 취임 1주년을 맞는 권 원장은 소비자보호 부문에 역대 어느 원장보다 심혈을 기울이고 있다는 평을 받는다.

꺾기 때문에 상당수의 개인 및 중소기업 고객들은 자의와는 상관없이 원금 손실 위험이 높은 펀드나 불필요한 보험에 가입해야만 했다.

이 같은 행위를 근절하기 위해 금감원은 지난해 8개 은행에 대한 기획검사를 실시했다. 신한, 기업, 부산, 제주, 농협, 수협, 씨티, 스탠다드차타드 등이다.

하나은행과 우리은행은 작년 하반기 정기 종합검사에서 금융당국의 점검을 받은 바 있다.

금감원은 꺾기가 적발된 은행에 대한 제재 수위를 내부 논의 중이다.

가계부채 대책과 관련, 권 원장은 당국의 대책만으로는 한계가 분명 있다며 “이젠 가계 스스로 허리띠를 졸라매는 수밖에 없다”라는 견해를 밝혔다.

권 원장은 가계부채 증가의 요인으로 주거비, 교육비, 통신비 등 세 가지를 지목했다. 그는 이어 “집도 넓은 데 사는 사람들은 평수를 좀 줄여나가야 할 것”이라고 말했다.

(코리아헤럴드 김연세, 김주연 기자)