Value context and insight. lkm@koreatimes.co.kr
Daegu Bank's nationwide expansion plan to have limited impact on oligopoly
The headquarters of DGB Daegu Bank / Yonhap
By Lee Kyung-min
DGB Daegu Bank submitted an application seeking approval to convert into a commercial bank. Market observers say this is unlikely to alter the current oligopoly, controlled predominantly by five major commercial lenders. They are KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup.
The Daegu-based regional bank will be able to rebrand itself as iM Bank, about 50 years after it was established as Korea's first regional bank in 1967.
DGB submitted the application to the Financial Services Commission (FSC). The preliminary approval was waived since the regional bank has a well-established banking business backed by human and physical infrastructure. The conversion is expected to be completed in March at the earliest.
DGB said its strategies will center on sustainable robust growth with customers across the country as a new hybrid bank.
It will have the advantages of internet-only banks that grant accessibility and cost efficiency as well as strengths in sales buttressed by decades of strong relationships with customers in the region.
Chief among its commitments is the promotion of competition in the banking sector to better meet the needs of small and medium-sized enterprises and low-credit borrowers. Relationship-fostering and inclusive financial services are among their priorities.
The bank said it will become the most regional national bank as the only commercial lender in the non-Seoul Metropolitan region.
However, industry insiders say the bank is not likely to deliver an immediate strong earnings, because the regional bank falls significantly behind its top five commercial peers in capital and sales networks .
The conversion coincides with a growing number of new players seeking to enter the oligopoly-protected banking industry, as buoyed by an FSC revision in July of last year.
The revision eased the application and screening processes for a license to open a bank including internet-only lenders to resolve monopoly issues. A number of bidders have since been preparing applications.