FSS chief warns against ‘performance pay party’ at banks

[Photos by Kim Ho-young]

The Financial Supervisory Service will play an active role as a supervisory authority in controlling moral hazards in the banking sector, the FSC chief Lee Bok-hyun said in an executive meeting Tuesday.

The comment comes after local banks promised to pay special incentives to its employees after posting high earnings lat year due to high interest rates.

Lee told executive officials to continue efforts to improve the banking sector’s performance-based compensation system to ensure it is not biased towards short-term performance, resulting in problems such as negligence in internal control and risk management.

From the start of the new year, large banks set as much as 400 percent of base salary as a management bonus. NH Nonghyup agreed to offer 400 percent and Shinhan Bank 361 percent, while KB Kookmin Bank will provide 280 percent plus special incentives of 3.4 million won per person.

Banks should stick to their original role to buttress the economy instead of focusing only on pocketing their profits, Lee emphasized.

Lee also said banks should make efforts to normalize the bank operation hours to pre-pandemic standards to minimize customer inconvenience.

Since July 2021, banks nationwide have been operating from 9:30 a.m. to 3:30 p.m., which is an hour shorter than before. The shortened bank operation hours remain unchanged although the pandemic situation is stabilizing.