SEOUL (Reuters) - South Korea launched a task force on Wednesday to study ways to improve business practices and pay schemes at banks, days after the country's president called on lenders to help curb the cost-of-living burden on vulnerable people.
The panel is headed by the deputy chief of the top financial regulator, the Financial Services Commission (FSC), and comprises regulators, scholars, researchers and officials from financial industry associations, the FSC said in a statement.
Kim So-young, vice chairman of the FSC, said at the panel's inaugural meeting that it would study ways to boost competition either between existing banks or by allowing entries of niche service providers.
The panel would also look into ways to help banks diversify their business practices, currently heavily dependant on interest rate margins, and improve their pay structure, he said.
It would also discuss possible measures to strengthen capital buffers against external shocks.
"By doing so, we believe that Korea's banking industry will be able to get more competitive and efficient, which will make the Korean financial markets more attractive to investors," Financial Supervisory Service Governor Lee Bok-hyun said at a separate meeting with foreign investors.
The authorities will respect financial firms' decisions on shareholder returns such as dividends, Lee added.
President Yoon Suk-yeol and other government officials have said there is growing public discontent over reports of big performance-sharing and early-retirement bonus payments by banks.
The Korea Exchange Bank Equity Index has fallen more than 7% this month, with most losses recorded after Yoon's remarks last week, while the broader KOSPI is down 0.3%.
Major banks have been lowering lending rates in the wake of Yoon's comments, South Korea's Yonhap news agency reported on Tuesday.