K bank's capital boost plan back in limbo

Internet bank regulation revisions may be passed after April elections

By Kim Bo-eun

The future of K bank is up in the air as its plan to boost its capital base came to a deadlock again, with the National Assembly Thursday failing to pass revisions to regulations on internet-only banks.

The revisions eliminate requisites for entities seeking to become majority shareholders of internet banks to be clear of violations of the fair trade act. This would allow the telecommunications giant KT to become K bank's majority shareholder by injecting fresh capital into the lender.

Last year, they requested financial authorities to review KT's eligibility as the bank's majority shareholder, but this was put on hold because KT was being investigated on allegations of collusion with other telecommunications firms in a circuit line business project.

The revisions to the regulations had been passed at the Assembly's Legislation and Judiciary Committee Wednesday, but failed to pass the plenary session the following day.

This extends difficult circumstances for K bank, which has suspended extension of new loans since April last year due to a lack of capital. This has enabled Kakao Bank, the other internet-only lender, to widen the gap between the two in the past year.

K bank currently has 505 billion won in capital and Kakao 1.8 trillion.

K bank, the first internet only bank here, was launched in April 2017, while Kakao Bank opened in July the same year.

K bank has suffered from ballooning losses, while Kakao Bank turned to a profit last year and is seeking to solidify its leading position with IT giant Kakao recently becoming its majority shareholder.

The revisions are expected to be put on another vote at a session that is set to take place after the April 15 general elections.

Finding new shareholders

K bank said it is preparing for both scenarios _ for the case the revisions are passed and also for the case they are not.

“We are considering means through which we can boost our capital base through KT's affiliates,” a K bank official said Friday. “We could also increase capital by getting new shareholders, because we have investors who are interested.”

“We are getting shareholders to discuss the matter. We will also prepare to take action in the case the revisions are passed next month.”

The process of discussions among shareholders to reach a conclusion will likely take time as K bank has 22 major shareholders, including Woori Bank, NH Investment & Securities, GS Retail, Hanwha Life Insurance and KT.

Meanwhile, former BC Card CEO Lee Mun-whan, who was formerly with KT, is expected to replace K bank's current CEO Shim Sung-hoon. The K Bank official denied that a figure for the position was already selected as the process to select candidates is ongoing.

Yet, Lee is seen as likely to lead the internet bank. At KT, Lee worked with KT CEO Koo Hyun-mo at the strategy division.

The next CEO's appointment needs to be approved at a general shareholders' meeting set to take place March 31.