Financial firms that handle dollar deposits and insurance are moving to refrain from selling related products this year. After the financial authorities ordered tighter oversight, seeing dollar-linked financial products as a factor pushing up the exchange rate, financial firms have kept a low profile by minimizing marketing.
As of the 20th, major banks are lowering interest rates on dollar foreign-currency deposits and holding back on marketing. Shinhan Bank cut its dollar deposits rate for maturities of at least three months and less than six months from an annual 3.21% on the 14th to 3.11% on the 19th. Woori Bank on the 15th of this month sharply lowered the dollar rate on its overseas travel-focused foreign-currency deposit, "WiBee Travel Foreign-Currency Deposit," from an annual 1.0% to 0.1%, one-tenth the previous level. KB Kookmin Bank is offering a 100% exchange-rate fee waiver to creators such as YouTubers, to encourage them to have dollars automatically converted into won upon deposit.
The insurance sector also has no separate plan to sell dollar insurance products. The four life insurers that currently sell dollar insurance products—AIA Life, MetLife, Shinhan Life, and KB Life—are said to have set sales strategies focused on managing existing contracts this year without expanding sales.
As the won-dollar rate surged close to 1,500 won, the financial authorities ordered financial firms to strengthen management of dollar-linked products. The Financial Supervisory Service called in senior vice presidents of commercial banks the previous day and conveyed a "refrain from marketing" directive regarding dollar deposits. Seeing individuals' enthusiasm for dollar products as one factor behind the exchange-rate rise, it reportedly asked the banking sector to help curb demand.
On the 16th, it summoned senior executives in charge at AIA Life, MetLife, Shinhan Life, and KB Life. The Financial Supervisory Service is currently asking insurers that handle dollar insurance to conduct self-inspections to determine whether risks associated with the products have been disclosed. It also plans to examine whether they complied with the "Rules on the operation of foreign-currency insurance products" established by the Korea Life Insurance Association. If there are additional issues to review or signs of violations are found, it plans to conduct on-site inspections directly at the insurers. As the Financial Supervisory Service moves quickly, a decision on on-site inspections is expected soon.
As of the 24th of last month, the balance of individual dollar deposits at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup—was $12.73 billion (about 18.7971 trillion won), up $917 million (about 1.3540 trillion won) from the end of 2024. It is the highest in four years since the end of 2021. The number of new dollar insurance contracts at AIA Life, MetLife, Shinhan Life, and KB Life rose from 40,598 at the end of 2024 to 117,398 at the end of last year, nearly tripling.
Lee Chan-jin, governor of the Financial Supervisory Service, on the 13th said, "Sales of overseas stocks and foreign-currency financial products are increasing on vague expectations of rising overseas asset values," and ordered, "Strengthen preemptive investor protection by raising awareness of the risk of losses from exchange-rate fluctuations."
An industry official said, "Some financial firms had internally drawn up strategies to ramp up sales of dollar products, but have recently rushed to retract them."