The financiers’ serious jokes
The countdown to the Dec. 19 presidential election is on. As the clock ticks, the economy comes to a standstill. Attention is entirely on who will win and what will change.
One needs to be well prepared for any shock or upset. It goes for both the corporate and financial sectors. The financial sector especially, with business entirely hinging on licensing, regulation and endorsements by authorities, may be heavily affected by which government comes into power.
But instead of anticipation, cynicism and a sense of helplessness prevail in the financial arena. A senior executive I recently met told me about a “joke” popular among financiers. It is a series titled “Regardless of Who’s Elected President” and consists of scripts for the narrative of the financial business when either of the two main candidates - Park Geun-hye of the Saenuri Party or Moon Jae-in of the main opposition Democratic United Party - is elected.
One is that regardless of who is elected, the next financial supervision chief will be a woman. Female legislators relatively loyal to Park or former President Roh Moo-hyun, under whom Moon served as chief of staff, will be prime candidates. No matter who becomes president, the financial sector will be instrumental for political purposes and loyalists are the most likely candidates to follow orders. Another name of a female candidate had been on the list when independent Ahn Cheol-soo was still running. But her name is likely to have been crossed off, the executive said.
The next is that regardless of who is elected president, financial companies will become easy scapegoats. A recent closed-door meeting on the financial sector attended by top financiers, government officials and economists raised the curtain on this issue. The theme was on the outlook for next year’s financial market. Prospects were gloomy with economic growth estimated to hover under 3 percent. Financial companies are naturally expected to fare poorly. Banking, insurance and securities companies were pessimistic about next year’s performance with revenues stagnating or falling. The external environment was bad, but they feared political risk or instability could cause the biggest damage.
Regardless of who is elected, the financial sector will be pressured to embrace societal responsibility. Park’s platform includes a promise to write off half of the debts of credit delinquents while Moon stands by so-called “Pieta (Piety)” laws restricting loan ceilings, ensuring fair lending practices and debt collection to help ease consumer debt burdens. Regardless of who gets elected, financial companies will be forced to squeeze out more. One financier fumed about how banks have always had to serve as the piggy banks of the government.
Another “joke” is that regardless of who is elected president, the heads of the country’s top five financial holding companies will be handpicked from either South or North Gyeongsang - where the presidential hopefuls were born. The incumbent chairmen of the top five - KB, Hana, Shinhan, Woori and Korea Development Bank - are currently all from Busan or South Gyeongsang.
Park and Moon promised to be unbiased and pledged equal opportunity in their potential appointments. But few in the financial sector believe it. Of course, top executive posts at financial companies are not public offices and the government has no stake in three of the five financial holding groups. By general practice, however, the government has a heavy hand in appointments of senior financiers. Chief executives of financial companies enjoy power and benefits and the government usually uses the position to reward loyalists.
The two candidates owe a lot to a lot of people, but since they both promised not to resort to cronyism, senior posts in financial companies would be best served by those who helped with the election, the “joke” goes. If not Busan or South Gyeongsang, it would be Daegu or North Gyeongsang in the southern region.
And last but not least, the punch line is the highlight of the cynical joke series. No matter who gets elected, the financial sector will face its worst period since the Asian currency crisis in the late 1990s. Banks were closed for the first time during the crisis that required tough restructuring prescribed by the International Monetary Fund in return for a bailout. In 1998 alone, about 68,500 employees lost their jobs in financial companies.
The financial sector and the country went under severe cost-cutting and austerity programs for three years. We endured, but at the cost of deepening polarization and ballooning household debt. One senior financial company official sighed, saying that the industry was in its worst state, but presidential hopefuls are all promising relief of household debt and support for consumer loans. He said the industry is about to face a home-grown meltdown.
So far this is just black humor. A series of jokes. We dare not to imagine such scenarios in real life.
I just hope the industry can look back and laugh at their cynicism.
* The author is the business news editor of the JoongAng Ilbo.
by Yi Jung-jae