The government has raised its voice in criticism against banks, placing them at the center of the blame for the burden of high interest rates. (Image courtesy of Yonhap)
SEOUL, Nov. 6 (Korea Bizwire) – An official from a commercial bank expressed, “I am concerned about the government’s apparent effort to stigmatize banks as public enemies and deflect criticism towards us, beyond merely characterizing us as public resources, all in a bid to placate small business owners and the self-employed.”
Once again, following earlier actions this year, the government has raised its voice in criticism against banks, placing them at the center of the blame for the burden of high interest rates. In response, discontent within the banking industry is on the rise.
The banking industry insists that even though interest rates have primarily risen due to global monetary tightening, it is unfair for the government to portray it as if banks are conspiring for unfair interest rate gains during times when ordinary people are facing difficulties.
Many also point out that the government’s repeated intervention and pressure can distort the interest rate system that ideally should be determined based on real-time financial market conditions and fundraising costs.
First and foremost, the banking industry is concerned that the government’s use of terms like ‘money feast’ and ‘servant’s role’ may create a misconception among financial consumers that the interest rates are increasing due to banks’ profit-driven motives.
An official from a commercial bank explained, “The current situation of high interest rates is not intentionally created by commercial banks, but rather it’s a result of increasing benchmark interest rates as global monetary policies pivot towards strong tightening after the COVID-19 pandemic. Interest rates increase in response to market interest rates reflecting both domestic and international economic conditions. However, it seems the government is encouraging misconceptions that these rate hikes are due to banks’ artificial actions.”
Another official from a different commercial bank added, “With global interest rates rising in line with global financial market trends, it’s common for banks worldwide to see increased profits. However, from a bank’s perspective, this can be seen as risk-taking. If delinquency rates continue to rise due to an economic downturn, resulting in the deterioration of the quality of loan assets, or if interest rates start to decline, it will naturally lead to a decrease in bank profits.”
Ashley Song (ashley@koreabizwire.com)
