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Wed, February 2, 2022 | 20:08
Companies
Regulations brake firms bidding for internet banks
Posted : 2019-09-23 17:33
Updated : 2019-09-23 17:36
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The Financial Services Commission headquarters / Yonhap
The Financial Services Commission headquarters / Yonhap

By Jhoo Dong-chan

Financial authorities plan to receive preliminary applications for the nation's new internet-only banks next month, but no potential major contenders, including large companies, have officially displayed an interest.

Earlier this year, the Financial Services Commission (FSC) received preliminary applications from firms who want to establish an internet-only bank, but rejected all of their applications in May due to lack of innovation and mounting concerns about applicant firms' governance and financing.

The FSC expected more firms to submit their applications in the October bid. However, not only major conglomerates but also existing contenders, such as Viva Republica, displayed signs of withdrawal from the bid.

Since not many firms seem to be interested in establishing an internet-only bank this time, the FSC announced the agency will provide a comprehensive consulting service for each applicant firm. However, experts said firms wouldn't submit their applications unless financial authorities ease related regulations.

The FSC claimed a number of firms have already shown an interest in setting up a new internet-only bank.

"I understand several firms are seeking to form a consortium for the bid in October," said an FSC official. "These firms feature a solid financial soundness. They made a series of inquiries about internet-only banks."

The FSC added the comprehensive consulting service will include a question-and-answer session for each preliminary applicant firm, explaining legal requirements and a detailed timetable for firms who get a preliminary approval for the bank.

Separate from responding to their inquiries, the FSC said the agency will also visit local e-commerce and IT firms to encourage their participation in the bid.

Industry insiders said a series of the FSC's moves indicate that major e-commerce and IT players, such as Naver and SK Telecom, have shown no signs of joining in the bid.

"We currently have no plans to participate in the bid for an internet-only bank," Naver CEO Han Seong-sook said during the firm's recent general shareholders' meeting.

Viva Republica has also officially displayed its complaint about financial authorities' excessive regulations on firms seeking establishing an internet-only bank. Viva Republica is the operator of mobile wire transfer app Toss.

"We have long prepared to launch a securities business. But the financial authorities keep coming up with impossible tasks for us," Viva Republica founder Lee Seung-gun said during a media conference at a recent fintech event.

Experts said firms won't join the bid unless the FSC lowers the regulation barriers.

"Non-financial firms are not allowed to own more than a 34 percent stake in an internet-only bank due to related laws. It is essential for them to form a consortium with financial firms," said a commercial bank official who asked not to be named.

"However, financial firms are not very interested in setting up an internet-only bank because the difference between internet-only and commercial banks are getting ambiguous. K bank and Kakao Bank used to attract customers with their various non-face-to-face financial services, but commercial banks now feature the same services. There is no point for them to additionally establish an internet-only bank."


Emailjhoo@koreatimes.co.kr Article ListMore articles by this reporter



 
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