The presidential office is said to be exerting strong influence over key pending issues in the financial sector. There is talk that the presidential office is behind continued delays on major issues such as penalty surcharges for the misselling of Hong Kong H-index equity-linked securities (ELS), limits on majority shareholders' equity in virtual asset exchanges, and plans to advance governance at financial holding companies.
According to the financial sector on the 8th, the financial authorities recently briefed the presidential office on the penalty surcharge related to the misselling of Hong Kong ELS. It is unusual to report sanction items for individual financial companies to the presidential office. Some in the financial sector also predict that the presidential office's views will be reflected in setting the penalty surcharge.
The financial authorities have discussed the level of the penalty surcharge for the misselling of Hong Kong ELS since the end of last year but have yet to reach a final conclusion. The Financial Supervisory Service (FSS) early this year notified the four major banks that sold Hong Kong ELS of about 4 trillion won in penalty surcharges. At the first sanctions review committee held thereafter, the FSS lowered the penalty surcharge to about 2 trillion won in consideration of voluntary compensation, and it was reduced to about 1.4 trillion won at the final review.
The financial sector had expected the final penalty surcharge to be decided by the first quarter at the latest, but the Financial Services Commission did not put the penalty surcharge item on the agenda at its two regular meetings in March or at the regular meeting on the 1st of this month. In the financial sector, there was an interpretation that discussions on sanctions are being delayed as the presidential office receives reports on the penalty surcharge.
The second-phase legislation of the Basic Act on Digital Assets, which would limit majority shareholders' equity in virtual asset exchanges, is also said to reflect the influence of the presidential office. Although the Financial Services Commission's research project for the second-phase legislation did not initially include limiting majority shareholders' equity, it is said that the measure was pursued after the views of a senior official in the current administration were reflected.
After deliberation, the ruling party and the government decided to push a plan to cap majority shareholders' equity in virtual asset exchanges at 20% (34% for corporations), but even that has been postponed indefinitely. An industry official said, "I understand the presidential office ordered a 'holding (suspension)' citing the need to coordinate views, which halted the discussion."
It is said that the Financial Services Commission's abrupt cancellation last month of the announcement on plans to advance governance at financial holding companies also reflected the presidential office's intentions. The presidential office asked the Financial Services Commission for supplementation, and there is speculation that, in the process, there was a power struggle among the heads of the financial authorities.
It was President Lee Jae-myung who directly ordered granting the Financial Supervisory Service's special judicial police (special police) the authority to initiate investigations. At the time, the Ministry of Government Legislation and the Financial Services Commission opposed granting the special police authority to initiate investigations. Real estate-related lending regulations are also said to be effectively driven by the presidential office.
The financial sector believes the presidential office's policy stance on finance has changed this year. Until last year, aside from some policies, the presidential office did not significantly intervene in individual pending issues or in chief executive officer (CEO) appointments at financial companies, but its influence has grown this year. There is also speculation that the president's intentions are being reflected, given that the figure mentioned as conveying the presidential office's views is a close aide to the president.
A financial industry official said, "Last year, the presidential office did not strongly take the lead on financial issues, but this year it definitely seems different. I also understand that there is considerable confusion in the process of the presidential office's views being communicated."