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Chief regulator suggests changing punishment guidelines

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(GlobalPost/GlobalPost)

By Kim Boram

SEOUL, Aug. 5 (Yonhap) -- South Korea's chief financial regulator said Tuesday he will consider punishing only financial companies for making illegal loans and leave the punishment of employees up to the firms, a remark that was made with the backdrop of the long-delayed discipline of hundreds of senior bank officials.

"I will consider refraining from imposing reprimands on individuals," Financial Services Commission (FSC) Chairman Shin Je-yoon told reporters after a meeting with local bank officials.

"It's desirable that banks discipline their employees for lighter breaches, while the authorities reprimand the institutions."

The Financial Supervisory Service (FSS), the financial watchdog, has held several rounds of disciplinary sessions and hearings since June 26 to mete out punishment to more than 200 high-ranking executives and officials from local banks for illegal loans and other irregularities, but final decisions have been delayed due to the scale of the pending cases and other external factors.

Banks have complained that they have to put off important decisions and schedules because their leadership is waiting for deliberation results from the FSS.

Shin also called for local banks' participation in nationwide efforts to regenerate economic dynamism and develop a new growth engine in order to boost Asia's fourth-largest economy.

"The South Korean economy is now facing a 'paradigm shift,' from a labor and capital-based quantitative growth to a creativity and idea-powered growth," Shin said.

"To go with the current, the financial sector, which has played a conventional role in providing capital to the manufacturing industry, must link the real economy with economic actors' creative ideas."

He said that the FSC is planning to promote tech-focused loans for mid-sized ventures with high-end technologies in a way to pump money into the real economy.

"Financing has failed to catch up to the pace of the development of the real economy," said Shin.

Last week, the country's new finance minister promised 26 trillion won (US$25.3 billion) in government spending, plus stronger fiscal measures and policy financing, as part of the Park Geun-hye government's efforts to boost the slowing economic recovery.

To keep up with the drive, the FSC earlier announced a comprehensive deregulation plan to remove business hurdles and outdated practices in the financial sector within this year.

It said it will eliminate some 40 percent, or 700 cases, out of the 1,700 legal barriers and restrictions that hamper business activities.

It is important for financial companies to actually remove the hurdles and support start-ups, so that people can feel the changes in their daily lives, Shin said.

"Banks have to strive to lead the sustainable growth by discovering new growth engines, such as supporting start-ups and innovative firms," he said.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/140805/chief-regulator-suggests-changing-punishment-guidelines