© Reuters. Case of losing a 5% annual bank deposit… Market Intervention or Secondary Finance? [채선희의 금융꼬투리]
Photo = Yonhap News “I tried to do some technology in the bank, but is it too late? It’s hard-earned money… I’m worried about putting it in the second financial sector, which is difficult these days.” (33 years old, 4 years of working life)
The 5% annual bank deposits that appeared in 14 years are disappearing. Until the middle of last month, there was also hope that bank deposits of 6% per annum would emerge soon due to the strong will of US monetary tightening and the increase in the base rate.
According to the financial sector on the 3rd, Woori Bank’s representative product, ‘Woori WON Plus Deposit’, offers the highest annual interest rate of 4.98%. This product was the first to open the period of annual deposit of 5% among large commercial bank time deposits. KB Kookmin Bank’s representative product, ‘KB STAR Term Deposit’, fell by 4.7% y/y. NH Nonghyup Bank’s ‘NH Allone e Deposit’ offers 5.1% per annum, but the base interest rate is 4.8% per annum, and a special preferential rate of 0.3% is added.
The reason why it is difficult to find deposits of 5% per annum in banks is the recommendation of financial authorities and concerns about financial crunch in the market. The increase in interest rates on deposits has slowed down as financial authorities, concerned that money will flow to banks compared to some industries experiencing a liquidity crisis, have asked to refrain from raising deposit rates.
Why asked the authorities, who had criticized banks for seeking excessive profits half a year ago and encouraged competition in interest rates by revealing the difference in the deposit-to-deposit interest rate (the difference between deposit interest rates and interest rates loans), to refrain from raising interest rates? Photo = Getty Image Bank Last month, Financial Services Commission Chairman Kim Joo-hyun told a gathering of bank officials, “The concentration of money in the banking sector may cause a shortage of liquidity in the secondary financial sector. Please refrain from competition too much fundraising.”
According to the Bank of Korea, there was a net inflow of about 164 trillion won from bank time deposits alone between this year and October. Between July and October, more than 20 trillion to 30 trillion won was poured out every month. In October, a total of 48 trillion won was put into the time deposits of the five major commercial banks alone.
In this way, if market funds are too concentrated in banks, funding problems can arise in the secondary financial sector, such as savings banks. In order for a savings bank to attract customer money, it is necessary to maintain a higher interest rate than the bank, which is not an easy decision in a situation where the money market is frozen. It is also said that there is a request from the 2nd financial sector for the actual bank’s recommendation to refrain from accepting competition.
Whether it was a request or a warning, banks did not further increase the interest rate on deposits after Chairman Kim’s comments. As a result, financial consumer dissatisfaction is steadily growing. This is because the interest rate on loans continues to rise while the interest rate on deposits goes down, and the damage is passed on to consumers. Investors who are struggling to find a place to invest amid the uncertainty in the stock market and the virtual currency market are raising their voices saying that even the 0.1% point interest rate (p ) is regrettable. ‘Excessive market intervention and inconsistent administration’, ‘After putting pressure on banks to do interest business, now… Very inconsistent policy’, ‘Shouldn’t interest rates be left to market flow? According to the government’s logic, the second financial crisis is really serious, but the people have no reason to give money to the second financial sector.
It is also difficult for banks. This is because the government has asked to refrain from issuing bank bonds as well as refraining from raising deposit rates. Funds need to be raised through bond issues and deposit interest rate hikes, but there are complaints that the authorities are all under pressure and their hands and feet are tied. Banks are also financial institutions, so they say that even an increase in interest rates on loans should be tolerated.
However, on the other hand, it is noted that the bank should play the role of ‘elder brother’ in an unstable financial environment as it has made the largest profit ever and has room to spare compared to other industries. According to the Financial Supervision Service, domestic banks made an interest profit of 40.6 trillion won in the first to third quarter of this year thanks to the increase in the interest rate. It was an increase of 6.9 trillion won from the same period last year, the largest ever.
Chae Seon-hee, Hankyung.com reporter csun00@hankyung.com
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