The Korean financial services industry has become highly synchronized with global financial trends as a result of increased deregulation, internationalization and liberalization. The Korean banking industry in particular has undergone major structural changes: the consolidation of banks has dramatically changed the market's competitive landscape and banks have shifted their focus to consumer services, etc. In other words, the Korean banking industry is now facing structural challenges as a result of past years' changes in market environment and industry-wide restructuring.
There are five main issues that the Korean banking industry needs to overcome. First, it needs to stabilize the market structure to ensure fair competition among its leading banks. Second, the systemic risks from consolidations and undifferentiated business strategies need to be closely scrutinized. Third, the banking industry needs to build a stable income structure through an appropriate mix of interest and non-interest income. Fourth, despite continued recapitalization and additional public funding, most banks need to build stronger capital bases. Fifth, most banks are in need to establish an organizational structure that can improve managerial transparency and better delegate responsibilities.
In order to solve these five issues, the Korean banking industry should have an overall structural vision that encompasses different growth strategies for three different groups: the globally -comparable, organically-growing, and regional. In addition, the scope of businesses and services offered by banks should be fundamentally extended so that large-sized banks can participate in non-banking activities such as capital markets related securities businesses. This diversification of banks' business offerings will help to increase stock market-based fund flows and improve the overall competitiveness of Korea's asset management industry. Individual banks should also focus on building up their capital bases (Tier I capital) by balancing out their dividend payout and internalizing operating profit for the next few years. Last but not least, to enhance financial stability of the banking sector as a whole, it is necessary to strengthen the responsibilities and precautionary roles for the government and supervisory authorities to assess systemic risks induced by real estate market volatility and macroeconomic instability.
우리나라 은행산업의 주요 과제와 전망(The major issues and prostects of Korean banking Industry)
[서울] : 한국금융연구원
|Series Title; No||정책조사보고서 / 2003-01|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|