The Financial Services Commission announced on the 3rd that it was “a choice to overcome the novel coronavirus infection (Corona 19)” with regard to the recommendation of the banknote’s dividend payout ratio within 20%. When criticism came out that it violated the rights of shareholders, he explained that “if it had been a normal situation, I would not have done this.”
Dae-young Kwon, Director of the Financial Industry Bureau, Financial Services Commission /Photo = Yonhap News
“The ECB (European Central Bank) was the same, and the UK was the same. The fidelity of capital is paramount to overcoming the Corona 19 crisis,” said Kwon Dae-young, head of the Financial Industry Bureau of the Financial Services Commission at a briefing on detailed tasks on the work plan.
On the 27th of last month, the Financial Services Commission recommended that banks and bank holding companies pay dividends within 20% of their net profit in response to Corona 19. It is the first time that the financial authorities have issued guidelines for dividends in banknotes because it is necessary to preemptively raise capital to cope with economic uncertainty.
As the financial authority’s dividend limit guidelines became known, the stock prices of the four major financial holdings plummeted 5.77% on average over the two days from the 28th of last month. The voice of the backlash of’government finance’, centered on the banking sector, also increased.
Director Kwon said, “The Bank of Korea, the Financial Supervisory Service, the Korea Deposit Insurance Corporation, and private members of the Financial Services Commission were seriously concerned,” he said. “It suggested a big direction.”
He then emphasized, “There is also a rating from credit rating agency Moody’s that Korea’s recommendation to limit dividends itself has made the bank’s capitality more substantial.”
In the guidelines on the dividend limit for the 2nd financial sector raised by some, “we did not specifically recommend it because most of the financial holdings are indirectly restricted,” he stressed that “protecting the soundness of capital is not a problem only for banks.” .
He added, “The government expects that the top managers and shareholders of the 2nd financial sector will make a good judgment and decide a reasonable decision and an appropriate level.”
Yoon Jin-woo, reporter at Hankyung.com [email protected]
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