Kwon Daeyoung: "We Must Break the Real Estate Trap and Expand Productive Finance"

Call for Expanded Investment in Advanced and Venture Sectors
Protection from Losses and Elimination of Personnel Disadvantages in Productive Finance Urged

The government has emphasized the need for the financial sector to actively support the real economy by promoting productive finance, while also calling for bold exemptions from liability and the removal of personnel disadvantages for losses incurred in this process.

Kwon Daeyoung, Vice Chairman of the Financial Services Commission, stated at the meeting of the Productive Finance Council for the financial sector held at the Government Complex Seoul on March 9, "The financial industry should support changes in the structure of the real economy by driving a major shift toward productive finance, transitioning from a fossil fuel-based energy structure to one centered on renewable energy, and actively participating in addressing regional imbalances across the country."

He continued, "There is growing market interest in a major transition to productive finance to break the chronic real estate issue and redirect funds toward advanced, innovative, and venture industries, as well as regional and investment sectors. Signs of change are already appearing, such as the recent increase in corporate loans. It is time to ensure these trends lead to meaningful and qualitative structural changes in our economy."

The financial sector plans to provide a total of 1,243 trillion won in productive finance over the next five years, with half of that amount to be supplied by private-sector financial institutions.

The government also stressed that productive finance should be evaluated not simply by the scale of support, but based on tangible outcomes such as discovering and supporting promising industries and companies.

To this end, Vice Chairman Kwon highlighted the need to: ▲ review whether organizational and workforce restructuring as well as improvements to key performance indicators (KPIs) are contributing to on-site decision-making; ▲ establish a system to reflect the judgments of industry competitiveness analysts in decision-making; ▲ introduce measures to exempt losses and remove personnel disadvantages arising in the process of productive finance; and ▲ expand connections among financial institutions and venture incubation facilities related to regional investment, emphasizing the need for ecosystem-level support.

Financial companies attending the council shared their plans and achievements for promoting productive finance.

Shinhan Financial Group established a productive finance office at the holding company and dedicated units at subsidiaries, reflecting relevant performance in executive evaluations and branch KPIs. As a result, by the end of February this year, it had already invested 3.16 trillion won, achieving 18.6% of its annual target ahead of schedule.

Hana Financial Group created a dedicated organization and revamped its KPI and incentive systems. It assigned a 120% evaluation weighting to loans for key advanced industry companies and plans to launch a 500 billion won energy and infrastructure fund next month to expand investment in renewable energy, AI data centers, and social overhead capital (SOC).

BNK Financial Group also established a productive finance support unit and formed industry-specific advisory panels. The group is restructuring its performance evaluation system to focus on credit lending based on technology finance and relationship-based finance, and plans to strengthen support for national strategic advanced industries and regional industries in the southeastern region.

Vice Chairman Kwon stated, "To prevent productive finance from becoming a mere formality, it is important for financial companies to institutionalize and systematize these efforts and internalize a 'productive finance DNA.' As performance and profitability will eventually be evaluated in the market, I urge you to ensure these initiatives translate into meaningful on-the-ground changes."

This content was produced with the assistance of AI translation services.