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March 19, 2024

Bank ownership rules eased for Kakao, Naver

PUBLISHED : October 16, 2018 - 14:56

UPDATED : October 16, 2018 - 14:56

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[THE INVESTOR] Korea’s financial authorities on Oct. 16 announced a set of revisions to the current ownership law of internet-only banks, paving the way for select big tech firms like Kakao and Naver to own a full-fledged bank from next year.

Under the current regulations on separation of financial and commercial capital, a non-financial company with more than 10 trillion won (US$8.60 billion) assets is banned from owning more than 10 percent stake in a financial company. The revision will elevate the stake limit to 34 percent for an ICT firm to become the largest shareholder. 




Following the revision that will take effect on Jan. 17, Kakao and KT that own stakes in internet-only Kakao Bank and K bank, respectively, are likely to increase their stakes to become the largest shareholders. The revisions, however, do not allow firms to get loans from the banks they own.

Now keen attention is being paid to the possible “Naver Bank” as the government plans to announce renewed qualifications for the operator of the nation’s third internet-only bank in the coming months.

Operating an internet bank takes at least 1 trillion won. There are a few tech firms here that can afford it. Along with Naver, Nexon, the nation’s No. 1 gamer maker, is also cited as a potential candidate.

Naver is considering extending its e-commerce business running on financial services, including its popular Naver Pay, according to industry sources. Financial companies such as Mirae Asset, Shinhan and Hana are also reportedly contacting the firm for a possible partnership.

Kakao Bank and K bank, the nation’s two internet-only banks, have seen a surge in their user numbers even though they are still losing money since their launch in July last year.

The bigger Kakao bank with 6.62 million subscribers and 1.4 trillion won assets has 9 trillion won in deposits and 7.4 trillion won in loans. But in the first half of this year it reported an operating loss of 12 billion won. In the meantime, Kakao Bank with 800,000 subscribers lost 39.5 billion won during the same period.

By Lee Ji-yoon (jylee@heraldcorp.com)

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