Korea’s top financial groups to unveil win-win measures this month

Major financial groups in South Korea are expected to unveil inclusive financial plans later this month, including loan payment suspensions and interest rate cuts amid growing pressure from the government.

The top five financial groups – KB Kookmin, Shinhan, Hana, Woori, and NongHyup – turned into an emergency system work mode over the weekend to discuss win-win measures.

The financial authority and chiefs of the five groups are scheduled to meet on November 16 to discuss plans for inclusive financing.

The financial groups are likely to propose measures such as loan repayment suspensions, maturity extensions, interest rate cuts, interest exemptions, and expansion of switch loans for small businesses, low-income groups, and young people.

Given the level of pressure from the government, observers say that the financial groups’ inclusive finance package may grow to exceed the 10 trillion won ($7.62 billion) that had been announced earlier in March.

Financial groups are weighing the situation to decide on the level of products with differentiated and unconventional benefits that they will present.

Woori Financial Group Inc. has made quick steps upon confirming the meeting with the authorities on Friday, with Chief Executive Officer and Chairman Yim Jong-yong chairing the meeting for preparations.

The group said that the measures being considered include expanding the supply of low-interest switch loans, exempting some small businesses from paying interest, introducing a special preferential interest rate for self-employed accounts, expanding the loan limit for young people, and offering interest cashback.

Hana Financial Group Inc. was the first among the financial groups to announce a 100 billion won financial support plan for 300,000 small businesses and self-employed people on Friday. It will return about 66.5 billion won in the form of cashback on interest paid by about 110,000 people over a period of time.

KB Financial Group Inc. and Shinhan Financial Group Co. are expected to come up with an inclusive financing plan as early as Monday.

Along with extending the period of the inclusive financial support program for small business owners, small and medium-sized enterprises, and young people, Shinhan Financial Group is discussing interest rate cuts, overdue interest exemptions, and support for accounts receivable insurance premiums.

KB Financial Group is reviewing measures to reduce interest rates for borrowers subject to high interest rates above a certain level among vulnerable groups such as small businesses.

The group currently has a program that offers a preferential interest rate cut of 2 percentage points to small and medium-sized enterprises whose annual loan interest rate exceeds 7 percent when they extend their maturity, and it is considering extending the program or expanding the number of beneficiaries and the interest rate cut.

NongHyup Financial Group Inc. has a focus on agricultural and rural support and is examining measures with plans to join the support for the financially vulnerable.

The government plans to announce measures to promote inclusive finance in December. Its three main pillars are securing budgets for financing the financially vulnerable, raising contributions from financial institutions, and passing the debtor protection bill. The government has increased the amount of inclusive finance budget in next year’s budget review.