South Korea bank shares slide amid political push to share profit
9:38 pm Wednesday, February 15th, 2023
By Choonsik Yoo
SEOUL (Reuters) -South Korea’s biggest financial groups saw their share prices fall on Thursday as investors interpreted a call from the president to share more profit with society as amounting to the strongest political pressure in years.
Such pressure is based on a lack of understanding of how the financial industry works, banking executives told Reuters on condition of anonymity for fear of adverse impact on employers.
“The remarks show there is a strong perception in this country that banks are public institutions and are based on a lack of understanding about how banks operate,” said the head of a mid-sized lender.
Shares of KB Financial Group Inc and Shinhan Financial Group Co Ltd fell more than 1% in early Thursday trade after their American depositary receipts plunged more than 5% on Wednesday in New York.
“The message from the government is that banks are making increasing profit and need to do more for society,” said Lee Byung-gun, head of research at DB Financial Investment. “This is not good for banking shares over the near term.”
President Yoon Suk-yeol, whose approval ratings have hovered at around half of disapproval ratings in major opinion polls, said on Wednesday lenders need to “voluntarily participate” in sharing the pain of vulnerable people.
Yoon’s comment came after – but did not refer to – local media reported in recent weeks that major banks paid hundreds of thousands of dollars to employees for early retirement.
A government statement, issued in relation to a meeting where Yoon made the comment, showed banks’ combined net profit reached 18.9 trillion won ($14.68 billion) in 2022, versus 16.9 trillion won in 2021.
($1 = 1,287.3600 won)
(Reporting by Choonsik Yoo; Editing by Stephen Coates and Christopher Cushing)
