Financial regulators launch task force to break banks' oligopoly

• Published date: 03 March 2023
• Publication title: The Korea Times

Small license, challenger banks considered to promote competition in banking

By Anna J. Park

Financial authorities made it official Wednesday their moves to bring in more competition in the local banking sector, aiming to break the current oligopoly enjoyed by the five major commercial banks. Citing the current oligopoly structure as harmful to customers' and utility, the authorities suggested the need to lower the hurdle of banking licenses for new entrants.

The Financial Services Commission (FSC), top financial regulator, and the Financial Supervisory Service (FSS) jointly hosted the first task force meeting committed to improving the management and practices of banks on Wednesday morning. The task force was made up of officials of both financial regulators, key financial industry associations and scholars. Its task was in response to President Yoon Suk Yeol's criticisms earlier this month about local banks taking excessive profits amid soaring interest rates at the expense of a debt-burdened public.

"The banking industry has an oligopoly structure, as the entrance into the banking market is limited by the government's approvals," FSC Vice Chairman Kim So-young said during the task force meeting held at the government complex in Seoul, Wednesday. "There are criticisms that banks rake in excessive profits from rising interest rates, rather than providing ample choices and differentiated services for customers," he added.

The vice chief of the regulator said the government will be examining various measures to promote further competition in the banking sector. Specifically, he mentioned the possibility of...