尹 Clearing the Bank of 'Parachute'? Top 5 Commercial Banks, Quick Resolution of Government Administration

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: December 17, 2024 (Tuesday)
■ Dialogue: Park Joo-geun, CEO of Leaders Index

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.
◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): Let's continue with YTN Radio Live Economy Part 2. President Yoon Suk Yeol's impeachment and uncertainty in the financial market have been partially resolved. Still, the banking sector preparing for next year is still in an unstable situation. For related information, we will talk with Park Joo-geun, CEO of Leaders Index. Welcome, CEO.

◇ Park Joo-geun, CEO of Leaders Index (hereinafter, Park Joo-geun): Yes, hello.

◆ Cho Tae-hyun: I think the financial market is still unstable. I can sense an atmosphere that if I touch something wrong, it will collapse, so what kind of crisis is there in the banking sector?

◇ Park Chu-geun: One of the most interesting phenomena in the impeachment process after December 3rd was the financial sector, which was the hardest hit by the impeachment, so the first round of impeachment was completed on Saturday anyway. And finance was also the slowest place to recover.

◆ Cho Tae-hyun: So you get hit hard and you have less resilience?

◇ Park Joo-geun: There's a reason. There are two reasons. First of all, the situation became uncertain as we fell into impeachment. So, there are two reasons why the financial sector was hit first amid the uncertainty of the situation, and first of all, uncertainty about the value-up policy was the greatest.

◆ Cho Tae-hyun: Policy uncertainty.

◇ Park Joo-geun: So the Yoon Suk Yeol government has emphasized a lot about value-up over the past year.

◆ Cho Tae-hyun: The biggest beneficiary of value-up was financial stocks.

◇ Park Joo-geun: Isn't that why you became uncertain about the value-up policy after the impeachment? That was the first thing I said. The second is because of the exchange rate, and this part is also slightly linked to value-up, and the government has set the guidelines for financial holdings, that is, bank owners, the ratio of common stock capital. What this is is based on the amount of uncertainty and how much money you have gained. This is called CET1, Common Equity Tier 1, so how much of this money is yours? It means to keep this money at 13%. If you keep above 13%, you can pay a lot of dividends, but if you fall below 13%, isn't it a little dangerous if you pay dividends? I gave you a signal like this. But the problem is that when the exchange rate goes up, this 13% standard averaged 13.02% as of the third quarter, and this is based on the exchange rate of 1,350 won among the four major financial holding companies.

◆ Cho Tae-hyun: There will be a difference in terms of evaluation.

◇ Park Chu-geun: That's right. Every time it goes up by 10 won, it falls by 0.02%. So it's 1,430 won now. The average value falls by 12.8%. So, foreigners said, "If this drop is enough, they won't be able to pay dividends next year, right? ’ concern about dividends It's related to value-up. Because of these two concerns, it was the most direct hit, and the resilience was the slowest.

◆ Cho Tae-hyun: As we said earlier when we opened the broadcast, the domestic financial industry is so influenced by the government that it's not necessarily a good thing, but anyway, in the current situation, the impact is even greater and as you said, resilience is inevitably slow. The problem is that this is now being transferred to financial policy, but how do you apply DSR? I think everything like Manet is confusing. What do you think?

◇ Park Joo-geun: First of all, that's why foreigners are looking at that because of that concern. That's why the financial authorities want to put out the lights quickly. So, the policy is uncertain, but we will continue to push ahead with what we want to pursue, but isn't it inevitable for some policies to change in the market? I think it's right to look at it from this perspective.

◆ Cho Tae-hyun: What are the things?

◇ Park Joo-geun: First of all, you raised the Depositor Protection Act by 100 million won. It's unclear about the amendment right now. The plenary session of the Political Affairs Committee passed, but there is a view of whether the plenary session can be moved on due to the recent political situation. And there's a bigger bomb. The PF problem is that the Yoon Suk Yeol government has been crushing since last spring, that is, it has been crushing since last year, but it has been crushing due to the general election and continuing to spin bombs. The problem of real estate insolvency PF reorganization is not over yet. This was the second business feasibility evaluation last month. However, financial companies are worried about delaying the bomb once again because it is not easy to dispose of insolvent businesses through a hard short sale method. Another thing is that this coincides with the legislative reform, and it is unclear whether the real-life insurance reform plan will be resolved now. So I don't know what the plenary session is going to be like, but anyway, the uncertainty has increased on these things that I've talked about because I think there's a high possibility that the financial investment tax will pass.

◆ Cho Tae-hyun: It's an area that I'm not going to pay that much attention to, so I don't know how long we're going to have to endure this unsettling situation like a sandcastle in a house built with this debt. Now, then we should talk about greetings. I received a lot of attention from the top five banks. There is a review that a generational change has taken place, so which bank can be represented?

◇ Park Joo-geun: Nonghyup Financial is usually the 4th largest bank. If we talk a lot about the 5th largest banks including Nonghyup Financial, I think the keywords for personnel management of the 5th largest banks can be summarized into 3 major categories. First of all, general companies usually guarantee a three-year term when they appoint a CEO. The bank has been changed to two years. So in terms of two years, most banks started with the Yoon Suk Yeol government. It's usually called 'pariah'. It's been two years since the appointment of those who have been parachuted in, and four places, excluding Shinhan Bank, are scheduled to change their agricultural cooperatives. Three changes have been made, and one of the characteristics is that the color of the government office is removed. So, if you parachute into external influence, you lose control of the organization.

◆ Cho Tae-hyun: Well, first of all, I don't know the organization well.

◇ Park Chu-geun: That's right. There have been a lot of financial accidents recently. There were also criticisms that this might be due to the loose grip on the organization, and in this sense, the first keyword is quickly losing the color of government administration. So, the first keyword is to increase the control of the organization by hiring people from within, and the second is interest rates that ordinary people and small and medium-sized merchants have suffered a lot over the past two years. Interest rates were high. It was the bank that benefited from that time. The bank's so-called deposit margin, NIM, has benefited tremendously. It's in the best interest. But the banking sector is now judging, 'Oh, the good times are over now. ’ I think that's how I judged it. So, two places set up two strategic managers and two sales managers, and so-called sales managers, so we need to devise strategies on how to preserve profits. That's why I sent out the field commander. You can look at it like this. So, I also posted salespeople with strong sales power in the bank. This is the second keyword. The third keyword is generational change as you just mentioned. The rest of the four major financial bank presidents except for our bank this time are those born in 64. But the person who came after President Cho in our finance is born in 68. I'm four years younger. At the same time, this person reorganized last week, and there were cases where he was born in 1971 as the vice president. So, along with reorganization, internal innovation is now being demanded. I think I can summarize it into three keywords like this.

◆ Cho Tae-hyun: If it's a normal company, you might think that people like this should have already come up, but banks are a little slow, so that's also the case. What you told me first is that our bank has become a lot younger. And you told me about your strategy and business, but Hana Bank said that a sales representative has been appointed as the president of the bank. Who is it?

◇ Park Joo-geun: In the case of Hana Bank, the head of Hana Bank's card affiliate has been appointed as the bank's president.

◆ Cho Tae-hyun: Representative Lee Ho-sung?

◇ Park Chu-geun: Yes. What's interesting about Hana Bank and KB Financial is that banks have a chairman of a financial holding company. Since there is a holding chairman who acts as the owner of our so-called company and the representative affiliate is the bank, Hana Bank and KB Financial selected a person with the same career as the chairman to match the hands and feet of the two. So, representatively, Hana Bank's president Lee Ho-sung is almost the same as Hana Bank's current chairman of financial holding if you look at his history. First of all, they have something in common that they are from the old town. Currently, President Lee Ho-sung graduated from Daegu Central High School, and Financial Chairman Ham Young-joo also graduated from Chungnam Ganggyeong High School. So, the second thing they both have in common is that they are salespeople, on-site experts. So, in the case of President Lee now, Hanil Bank in 1981. You should know that Hana Bank combined with Hanil Bank. So this is the last generation, but there is still some conflict between the two factions. That's why I'm always the president of the bank, but this time, I've appointed a former Hanil Bank member.

◆ Cho Tae-hyun: Is there any factional conflict with KEB?

◇ Park Chu-geun: There's such factional conflict. It could be a so-called faction from KEB or Hanil Bank, but this time, he was appointed as a former member of Hanil Bank. So, this person went to Hanil Bank, went to Seoul Bank, and merged with Hana Bank from Seoul Bank, and he is a thorough businessman. So, since I joined the company, I've been the head of the sales group, and I've been the head of the sales group. So, at Hana Bank, especially Hana Bank, I think he set this person up because the return is low.

◆ Cho Tae-hyun: You're saying KB is similar, right?

◇ Park Joo-geun: So is KB. KB also appointed Lee Hwan-joo, CEO of KB Life Insurance, which is the first non-banking affiliate to be appointed. If you look at this person, he's very similar to the current chairman. Chairman Yang and Lee also have almost the same history, so CEO Lee is also the first CEO of KB Life, which was created by the merger of KB Life and Prudential Life. Currently, former chairman Yoon and chairman Yang are also the top contributors from LIG Insurance, the predecessor of KB Insurance, so now they have reorganized the organization and selected people who are similar to the chairman and president.

◆ Cho Tae-hyun: So there may be different choices in this area, whether it's a strategy expert or a sales expert, but I chose someone who fits well anyway. However, in the case of Shinhan Bank, as you said, this is the only part that has not been replaced and has been reappointed. What kind of background do you think it is?

◇ Park Joo-geun: It was very unusual. The president of Shinhan Bank is usually a two-year term, but usually after two years, he only gives one year to serve consecutive terms. That's usually the case. But this time, they gave me all two years. I gave him two more years of term, and the reason is management performance. Because Shinhan Bank beat KB Bank. So, KB and Shinhan always have a battle of pride in the four major banks. Since it is a battle between who is the leading bank, President Chung beat KB Bank during his tenure this time. That's why it came up to the leading bank. First of all, if you look at the cumulative net profit by the third quarter, Shinhan Bank is now worth 3.1 trillion won. Until the third quarter, Kookmin Bank has won 2.6 trillion won and Hana Bank has won 2.7 trillion won, so it has won quite a lot. Woori Bank is 2.5 trillion won, so the ranking is going down like this, but it recaptured Reading Bank in six years. This is the biggest ball. And the biggest weakness of domestic banks in Korea right now is why they don't go abroad and how long they will only do interest business. You always get criticized.

◆ Cho Tae-hyun: I know. My first place of entry was a bank, and that was 10 years ago. It's the same as now.

◇ Park Joo-geun: In this part, Shinhan Bank made a little progress through overseas sales. Because of this, I think this is probably the biggest reason why I've been reappointed this time.

◆ Cho Tae-hyun: That's right. It may be natural for those who have achieved results to serve a second term, but you did well. However, NH Nonghyup Bank still hasn't announced its personnel appointments. How's the atmosphere?

◇ Park Joo-geun: In the case of NH Nonghyup, unfortunately, the listeners should know that Nonghyup has a central president. The central chairman is the strongest. And there is the chairman of Nonghyup Financial Group and there are two chairmen. Then there is the president of NH Bank. Kang Ho-dong, president of the National Agricultural Cooperative Federation, was elected by election and is now in. The chairman of NH Nonghyup's financial holding company was a person who rode right after the inauguration of the Yoon Suk Yeol government. So he was a bureaucrat in the presidential camp in Yoon Suk Yeol. And the chairman of the Nonghyup holding company has always had former bureaucrats sitting at the holding company chairman. The place with the worst government office was the National Agricultural Cooperative Federation. But this time, this person's term of office is over, and the president of the bank is also over. So, the chairman of the holding company, the chairman of the financial holding company, and the president of the bank should be replaced at the same time, but the point to watch this time is that it has just become a hiatus. It became a hiatus for government officials to enter, and for Kang Ho-dong, the central chairman, the only opportunity to exercise his personnel rights came during this hiatus. In this impeachment situation, the most important point for me this time is Nonghyup Financial Group. The key point to watch is whether a former bureaucrat will come again this time or what kind of group he will watch if he comes. So I think the president of the bank is the next thing. So, in a way, Nonghyup Financial Group has a treatment opportunity to innovate in a way. You can get out of government.

◆ Cho Tae-hyun: You didn't want to, but you can say that this opportunity fell from the sky. Then, there will be a lot of mountains in the future with these new faces in the financial sector, so what do you think is the key?

◇ Park Joo-geun: As you said earlier, the biggest problem in the Korean financial sector is that innovation does not occur. In order to make the effect of everything, we tried so-called fintech, Internet banks, and other things, but they were all useless. And even though I shouted for Global IB Bank, it was useless. The reason is that this real estate engineering has generated a lot of constant interest margins. So, if the profit is good, you don't need to innovate. However, the situation has changed a lot now, but it is returning to the era of low-interest rates. Slowly. I think there are a lot of tasks such as how banking innovation will take place, how to advance into the global market, how to secure new global finance, how to change banks in the AI era. However, despite this task, when I look at the personnel appointments this time, I think I picked a sales representative to do more sales. So, it means to keep more interest margins and operate more, but I'd like to ask you a little question about whether that strategy is correct.

◆ Cho Tae-hyun: Rather, I think small and medium-sized banks are more active in overseas expansion and try to find a way out. However, last weekend, the impeachment bill said that each commercial bank held an emergency inspection meeting right after the National Assembly passed, but if you delay this appointment, how do you think each bank will plan next year's strategy to overcome uncertainty?

◇ Park Joo-geun: First of all, the exchange rate is the most sensitive.

◆ Cho Tae-hyun: As expected, the exchange rate.

◇ Park Joo-geun: When the exchange rate goes up like this, banks start taking money out because companies are also trying to increase their foreign exchange reserves. And as I said at the beginning of the year, if CET1 doesn't keep 13%, it starts to take money out of foreign countries. So I think I'll probably do my best to defend this, and well, I've had no choice but to step up because the Financial Services Commission and the Financial Supervisory Service have led the value-up so far.

◆ Cho Tae-hyun: That's right.

◇ Park Chu-geun: Right. I don't listen to words that I can't help but fly as an example, so even if there is no breath, there is a point to look at whether banks themselves will do value-ups that increase their own value. And how can I do this on my own when I have not been able to overcome the hurdles of innovation? As you said earlier, banks are conservative in the most conservative corporate culture. So, in order to create such innovations, we need to recruit them from the outside, but when we were doing IT fintech, talented people began to come in from outside for a while. To do big data or something like that, I stopped after that. That's why I think how to move on to these parts internally will be a big point to watch in the future.

◆ Cho Tae-hyun: Internal is important, but I think we should also induce innovation by solving excessive regulations related to finance externally. So far, I have taken a closer look at the personnel movements of the financial sector, especially the banking sector, with Park Joo-geun, CEO of Leaders Index. Thank you for talking today.

◇ Park Joo-geun: Yes, thank you.

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