[2026 National Assembly Audit] Lee Eok-won: "Reviewing Structural Solutions to Widening Gap Between First- and Second-Tier Financial Sectors"

Financial Services Commission Chairman Lee Eok-won said he would review structural measures to address the growing divide between the banking sector and savings banks and mutual financial institutions. He said it was necessary to examine the business models and roles of each sector and strengthen prudential regulations for institutions with inadequate management controls.

Lee Eokwon, chairman of the Financial Services Commission, answers lawmakers' questions during a comprehensive parliamentary audit of the Financial Services Commission and other agencies at the National Assembly on Oct. 22, 2026. Photo by Yoon Dongju

During a National Assembly Political Affairs Committee audit on Oct. 22, Lee responded to Democratic Party of Korea lawmaker Yoo Dong-soo, who called for measures to address imbalances among the sectors, saying, "We are continuing to examine even the structural aspects" and "will work to come up with measures."

According to Yoo, the banking sector's total assets were 3.8 times the combined total assets of savings banks and mutual financial institutions at the end of 2023, rising to 4.3 times by the end of June this year. Although the deposit protection limit was raised from 50 million won to 100 million won last September, deposits at savings banks and mutual financial institutions fell by 29.5 trillion won over the past year. By contrast, bank deposits increased by 166.8 trillion won.

Lee said that savings banks and mutual financial institutions were finding it difficult to actively attract deposits because the collapse of real estate project financing (PF) had reduced their investment opportunities. He added, however, that it was also necessary to examine whether competitive conditions were balanced across the sectors.

Yoo pointed to a vicious cycle in which financially strong banks secure high-quality loan assets first, leaving the non-bank financial sector to make loans with relatively lower collateral values or credit ratings. Financial Supervisory Service Governor Lee Chan-jin also said he recognized the seriousness of the situation and would seek solutions together with the Financial Services Commission.

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