[Exclusive] After Deposit Protection Raised to 100 Million Won, Surcharge Grade Savings Banks See Deposits Surge 3.4 Times

Data from Choi Eunseok of the People Power Party submitted for the National Assembly audit

Since the deposit insurance coverage limit was raised to 100 million won, the amount of large deposits within this limit at savings banks classified as “surcharge grade”—those required to pay higher premiums due to relatively high financial and managerial risk—has increased by a factor of 3.4.

According to data submitted to Assemblyman Choi Eunseok of the People Power Party, a member of the National Assembly’s Political Affairs Committee, by the Korea Deposit Insurance Corporation on October 6, insured deposits at surcharge grade savings banks exceeding 50 million won but not exceeding 100 million won increased from 3.8 trillion won at the end of June last year to 12.9 trillion won at the end of March this year, representing a rise of 9.1 trillion won (239.5%). Of the total increase in deposits across all savings banks within this bracket—14.9 trillion won—61.1% occurred at surcharge grade savings banks.

The Korea Deposit Insurance Corporation applies differentiated premiums by evaluating the financial and managerial stability of financial institutions. Standard grade institutions pay the standard deposit insurance premium rate (0.40% for savings banks). Discount grade, which reflects excellent risk management, receives a 7–10% reduction from the standard rate, while surcharge grade, indicating higher risk factors, is charged a premium that is 3–10% higher than the standard rate.

Deposits at discount grade savings banks exceeding 50 million won but not exceeding 100 million won increased by 95.8%, and at standard grade banks by 129.6%. In terms of growth rate, surcharge grade savings banks saw increases that were 2 to 3 times larger. Across all banks, insured deposits within this range grew by only 1.8% over the same period. In particular, commercial banks with surcharge grade only saw a 3.4% increase.

Assemblyman Choi stated, “Since the expansion of the deposit protection limit, more than 60% of the increase in large deposits within the coverage limit occurred at surcharge grade banks,” and added, “Authorities need to examine whether this is encouraging moral hazard by enabling people to deposit funds without regard to the soundness of financial institutions.”

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