The chief executives of South Korea's five largest commercial banks, whose terms expire at the end of this year, came under broad criticism at a parliamentary audit over hacking incidents in the financial sector, household lending curbs and interest rate practices. Questions over CEO accountability for the hacking cases drew particular attention, raising the prospect that the hearings could affect the selection of the banks' next leaders.
Five bank CEOs appeared as witnesses on the 19th at the National Assembly Political Affairs Committee's audit of the Financial Supervisory Service (FSS): Lee Hwan-joo of KB Kookmin Bank, Jung Sang-hyuk of Shinhan Bank, Lee Ho-sung of Hana Bank, Jung Jin-wan of Woori Bank and Kang Tae-young of NH NongHyup Bank. It was the first time since 2022 — four years ago — that all five appeared together. All five see their terms end at the close of this year, with successors to be named.
Han Chang-min, a lawmaker of the Social Democratic Party, pressed Shinhan Bank CEO Jung Sang-hyuk on whether he intended to seek another term, saying, "If you cannot even properly protect customer information and internal control management is inadequate, you have no standing to discuss serving another term." Responding to repeated questions, Jung said, "I am sorry to our customers. I have not thought about another term at this point," adding that he was "focused on compensating victims and preventing a recurrence."
Cuts to the banks' information security budgets also came under scrutiny. Asked by Park Sang-hyuk of the Democratic Party of Korea why KB Kookmin Bank's information security budget for 2025 was lower than in 2022, CEO Lee Hwan-joo said, "In 2022, our financial institutions carried out a next-generation 'big bang' type project, the kind that is usually done once every 10 years." He added, "I was briefed that it was a year when spending rose on a one-off basis because we invested in various pieces of equipment, so using that as a benchmark creates a gap."
Criticism also continued over household lending curbs. Shin Dong-wook, a lawmaker of the People Power Party, questioned how KB Kookmin Bank came to cut its maximum mortgage limit to 300 million won from 600 million won. Lee said, "Last year we received a penalty for breaching the total volume cap on household loans, which reduced our quota, and because a mortgage takes about three months from contract to final payment, there was a very high chance of exceeding the limit in the meantime."
Lawmakers also raised the suspicion that banks had protected profitability by cutting preferential rate discounts by a wider margin than they lowered their loan spreads. According to Min Byoung-dug of the Democratic Party, Kookmin Bank lowered its loan spread by 0.08 percentage point between June and August while cutting preferential rate discounts by 0.31 percentage point. NongHyup Bank lowered its spread by 0.26 percentage point while reducing preferential discounts by 0.61 percentage point.
"Even though you are aware of the intent behind the revised Banking Act, wasn't lowering preferential rates a deception of consumers?" Min said. When the bank CEOs replied that they would "look into the details separately and report back," Political Affairs Committee Chairman Yoo Dong-soo sharply rebuked them, saying, "Are you saying you do not know about your own preferential rate policy? You serve as bank CEOs without even knowing that?"
Accountability for a string of financial incidents was also pursued. Kang Joon-hyun of the Democratic Party pointed to a 10.5 billion won case of improper lending at Woori Bank and a 107.6 billion won financial incident at its Indonesian overseas unit. CEO Jung Jin-wan said, "I am sorry that so many incidents have occurred," adding, "Domestic internal controls are now largely overhauled, but there were difficulties at the overseas unit, including dispatching staff. We will do our utmost to resolve the incidents and recover the funds."