Korea warns against banks' big dividend payouts

South Korea's Financial Supervisory Services put the brakes on local financial groups' moves to dole out substantial amounts of dividends to their shareholders.

"Maximizing shareholders' rights is important, but it's also important to protect customers and consumers,"  FSS Gov. Kwon Hyouk-se told reporters after a seminar in Seoul.

Kwon also stressed the importance of beefing up enough loan loss reserves to brace against risks stemming from growing project financing loans and the eurozone debt crisis.

The regulator's remarks came amid expectations that the country's major banking groups will move to pay out hefty sums of dividends to their shareholders.

The top four banking groups -- KB Financial Group Inc., Woori Finance Holdings Co., Shinhan Financial Group Co. and Hana Financial Group Inc. -- are expected to rake in a net profit of 9.8 trillion won for this year, according to forecasts made by Daishin Securities Co.

If the four groups pay out 24 percent, or 2.3 trillion won, of their net profit in dividends to shareholders, foreigners are projected to receive 1.2 trillion won, the brokerage said.

Foreign investors' holdings in KB Financial, Shinhan Financial and Hana Financial stand at 63.3 percent, 61.3 percent and 65.6 percent, respectively.

The full story is available at Yonhapnews.