Financial firms must get aggressive

Korea’s financial industry must expand aggressively to compete on the global stage, while the accountability of top executives at financial firms needs to be enhanced.

A joint study released yesterday by three think tanks - the Korea Institute of Finance (KIF), the Korea Capital Market Institute (KCMI) and the Korea Insurance Research Institute (KIRI) - said Korea’s banking and brokerage industry should follow these steps to globalize.

The study was commissioned by the Financial Services Commission and was conducted over a seven-month period with the help of some 30 researchers.

The study found that although Korea is the world’s 15th-largest economy, its financial industry is still relatively underdeveloped. Only 10 Korean financial companies were included in the world’s top 1,000 banks - much lower than the U.S. (159) and Japan (97).

The report said that the Korean financial industry needs to employ a strategy that focuses on turning the country into a financial hub by attracting overseas investments as well as aggressively advancing in the global market. The report advises Korean companies to speed up their entry into the Asian market, which is showing exceptional growth. Additionally, the industry needs to create at least one major bank within five years, which could be accomplished through mergers and acquisitions, the report said.

The study also emphasized the need to enhance the accountability of financial industry executives. It said the recent reforms targeting outside directors in the banking industry should be expanded to include other financial institutions such as securities firms and insurance companies.

The results of the study will be discussed in a symposium slated for Monday. Financial authorities will then mull over the suggestions and decide whether to incorporate them in policies.

By Kwon Hyuk-joo, Jung Jae-yoon [jyj222@joongang.co.kr]