Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
FSS orders K bank to improve liquidity management
The headquarters of K bank located in central Seoul / Courtesy of K bank
By Anna J. Park
By Anna J. Park
The Financial Supervisory Service (FSS) has called on K bank to make improvements in the two main areas of risk assessment and liquidity management. The financial authority announced these instructions as an administrative guidance, with the aim of urging other financial companies to pursue similar measures voluntarily.
The FSS asked the country's first internet-only bank to enhance its risk assessment capabilities due to the risks of liquidity shortage. It demanded that the bank strengthen its risk assessment models and risk management scenarios, and also urged the bank to conduct an independent verification of its risk assessment models at least once a year.
The FSS also advised the bank to operate its own early warning indicator system to detect risk factors in liquidity management. The financial authority pointed out that the internet-only bank has increased the relative volatility of its deposits due to its partnership with the country's largest cryptocurrency exchange, and that it also does not operate a sophisticated early warning system. The bank was also criticized for the lack of thoroughness in its monitoring efforts.
“The FSS advises K bank to add various early warning indicator systems, which would be effective in discerning any liquidity risks, given the bank's unique business strategies and features. The FSS also called for enhancement of its relevant indicator monitoring efforts,” the FSS' statement read.
A K bank official said the bank plans to strengthen its work processes by implementing the administrative guidance fully.
Launched in April 2017 as the country's first internet-only bank, K bank plans to go public sometime later this year. If it succeeds, K bank will be the second internet-only bank to be listed on the Korean stock market, following KakaoBank's IPO last year. K bank's corporate market cap is estimated to be between 6 trillion won ($4.9 billion) and 10 trillion won, although the estimation is hard to predict, given that KakaoBank's market cap declined to 23 trillion won this week from a whopping 40 trillion won last August, immediately after its IPO.
K bank's annual net profit increased dramatically to 22.4 billion won ($18.4 million) last year, which is a huge growth from the net annual loss of 105.4 billion won it logged in 2020. The bank's number of customers rose to 7.17 million as of the end of last year, from 2.19 million in 2020.