‘Small business owners are like slaves to banks,’ Yoon says

“Small business owners are like slaves to banks as they struggle with high-interest rates and work hard only to repay their principal and interest back to banks,” South Korean President Yoon Suk Yeol said during a Cabinet meeting on Monday with a deep sigh. Stock prices of financial holding companies all fell as the president’s comment, which seemingly reflects the public sentiment, is interpreted as his direct criticism targeting the monopoly and oligopoly issues of banks with excessive rent seeking based on spread between deposits and loans.

“The members of the presidential office, including the chief presidential secretary, senior presidential secretaries, presidential secretaries, and executive officers, visited 36 sites of people’s livelihood and listened to people’s desperate voices,” said President Yoon in his remarks during the Cabinet meeting held at the presidential office in Yongsan-gu. “Banks were saved with the ‘public funds,’ meaning taxes paid by people, during an economic crisis,” said a key member of the presidential office. “It implies that banks should play more fundamental roles for people.”

“People feel like there is a huge concrete wall that cannot be broken even by a nuclear bomb between them and senior government officials,” said the president on Monday, following his repeated comments on the ground over the last few days. “I sincerely hope that there can be a little crack in the wall for the sounds of people’s breaths and voices to be heard.”

The banking sector is clearly perplexed by the president’s comments as it is deemed that the government began ‘bashing banks’ again despite banks’ efforts to seek measures to promote non-interest income and proactive cooperation with the win-win financing initiative. “The government’s firm stance is incomprehensible as banks joined in efforts to support small business owners, defer the repayment of the principal and interest, and for the win-win financing initiative. “The banking sector is agonizing over what it should do further.”


Joo-Young Jeon aimhigh@donga.com