K bank CEO tasked with capital increase within this year

K bank CEO Shim Sung-hoon speaks during an interview with The Korea Times in this November 2018 file photo. / Korea Times photo by Shim Hyun-chul

By Park Jae-hyuk

K bank's CEO recommendation committee has extended CEO Shim Sung-hoon's term to Jan. 1 next year so he can finish a capital increase, the nation's first internet-only bank said Thursday.

Shim was originally set to end his three-year term Sept. 23.

“Our recommendation committee made its decision regarding Shim and other executives, considering stable management and innovative growth,” a K bank official said.

“In order to carry out important tasks, including the paid-in capital increase, the committee decided to extend the terms of the CEO and the vice president temporarily.”

The online bank has struggled to increase its capital since the start of this year.

It initially planned to receive a massive capital injection from KT, the de facto largest shareholder of K bank, so that the mobile carrier could raise its stake to 34 percent.

But it hit a snag as the Financial Services Commission decided to halt the review of KT's plan in April, following an antitrust inspection of the mobile carrier.

In addition, major shareholders including Woori Bank and NH Investment & Securities have failed to reach an agreement on the massive capital increase plan.

In August, DGB Financial Group, which had been expected to inject capital into K bank, decided against it, considering worsening business conditions because of global trade feuds.

Against this backdrop, K bank stopped offering certain loans amid concerns over its financial health.

Although it increased its capital to 505.1 billion won ($421 million) in July by issuing new stock worth 27.6 billion won, the amount is considered not enough for its business normalization.

According to the Financial Supervisory Service, the Switzerland-based Bank for International Settlements (BIS) capital adequacy ratio of K bank stood at 10.62 percent at the end of June, down 1.86 percentage points from the end of March.

Its ratio was lowest among 19 commercial banks in Korea.