Financial Supervisory Service Meets with Chairmen of 18 Bank Boards "Must Prevent Real Estate Loan Concentration"

[Financial News] The Financial Supervisory Service met with the chairmen of the boards of 18 domestic banks to request that they prevent the concentration of real estate loans and actively play a role in financial intermediation so that funds can move to productive sectors. They also urged them to focus on social responsibilities such as supporting the recovery of vulnerable groups.
The Financial Supervisory Service announced that on the 14th, they held the '2025 Regular Meeting' with the chairmen of the boards of 18 domestic banks, presided over by Kim Byung-chil, Deputy Governor in charge of Banking and Small Finance. 
Deputy Governor Kim said at the meeting, "The recent concentration of real estate-related loans hinders the balanced growth of the economy and can cause financial system risks in the event of external shocks," and added, "Please review management strategies with a balanced perspective in the board to ensure that banks can faithfully perform their financial intermediation functions to productive sectors." According to the Financial Supervisory Service, the balance of real estate-related loans of domestic banks surged from 1,167 trillion won at the end of 2019 to 1,673 trillion won at the end of last year.
They also urged banks to take social responsibility for vulnerable groups such as small business owners and self-employed individuals. Deputy Governor Kim said, "The difficulties of vulnerable groups, including small business owners and self-employed individuals, are worsening due to the aftermath of high interest rates and prolonged economic slowdown after COVID-19," and added, "The Financial Supervisory Service will work to create an inclusive financial environment to support the recovery of vulnerable groups, and we ask the board to actively cooperate based on social responsibility." 
Regarding the bank's accountability structure introduced this year, he evaluated that the roles and responsibilities within the organization have become clear and the awareness of employees has been heightened.
However, Deputy Governor Kim said, "Continuous improvement is needed for the infrastructure aspects such as manuals and IT systems and the insufficient parts in the implementation process," and added, "The board should faithfully perform its monitoring and checking functions regarding the fulfillment of internal control management obligations based on the accountability structure." 
He also pointed out, "Regarding the best practices for the advancement of governance, tasks that still need improvement from a medium- to long-term perspective, such as CEO succession, collective suitability and independence of the board, should be continuously pursued by the board," and added, "The board should pay special attention to ensure that whistleblowing is activated to prevent financial accidents and form a healthy organizational culture."
He said it is positive that the banking sector is widely adopting artificial intelligence (AI) technology. However, he added, "As new types of risks such as personal information protection may arise, the board needs to pay attention and make efforts to establish a governance system to manage them."
In response, the chairmen of the boards said, "We will redefine the status of the board as a subject that presents sustainable directions and leads organizational culture together with the management, beyond a simple decision-making body," and added, "We will continue to exchange opinions for the development of the banking industry through regular communication." 

sjmary@fnnews.com Seo Hye-jin Reporter