South Korea’s top financial watchdog chief said Thursday that the agency would step up checks on financial institutions bearing the bigger brunt of market volatility prompted by global inflation, while reinforcing internal oversight in the sector.
The local currency hit an intraday low of 1,397.9 won against the US dollar in the onshore market before closing at 1,393.7, its lowest level since March 2009 during the global financial crisis. The benchmark Kospi fell to 2,401.83, losing 9.59 points, or 0.4 percent, from Wednesday’s session.
“We will make sure we have a full understanding of contingencies financial institutions are preparing, with a focus on those more vulnerable to volatility,” Financial Supervisory Service Gov. Lee Bok-hyun told reporters at a press conference, stressing the need to contain spillover risks.
Lee discussed empowering consumers caught in the latest market storm where they face not only higher borrowing costs in the face of soaring prices, but fallout from banks’ failure to properly enforce their internal compliance. The agency chief was referring to recent suspicious wire transfers involving local banks and a local cryptocurrency exchange, which had taken part in handling at least 8 trillion won ($5.7 billion) in overseas remittances. Some suspect digital assets were used to launder money.
Earlier this year, Woori Bank, one of the five major lenders, also reported a theft involving an employee who had allegedly stolen at least 700 billion won. The employee is now standing trial, and some have accused the agency of using the incident as cover for encouraging stronger internal compliance at banks. But when asked about whether the agency was backing an unwarranted crackdown, Lee was resolute.
“I am not saying the head of every financial institution and company should be accountable for everything his firm does or doesn’t do. What I am trying to convey here is that chief executives should own up to something they have clearly done wrong,” Lee said.
Meanwhile, the agency chief stressed that he would take a positive look into deregulation that could lead to new growth in the sector. Lee reaffirmed that he would seek to support fair competition between firms in the financial technology space like Naver and Kakao.
