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Online banks see some deterioration

Capital adequacy ratios for both Kakao Bank, K bank fall

Sept 03,2019
The financial soundness of Korea’s relatively young online banks took a turn for the worse.

Both K bank and Kakao Bank saw declines in their capital adequacy ratio - a bank’s available capital compared to its risk-weighted credit exposure - in the first half of this year

The capital adequacy ratio of K bank was 10.62 percent as of the end of June, down 1.83 percentage points compared to three months earlier, according to the Financial Supervisory Service.

Kakao Bank’s capital adequacy ratio was 11.74 percent, down 1.86 percentage points.

The Switzerland-based Bank for International Settlements (BIS), an international organization of central banks, requires lenders to maintain a ratio of 8 percent or higher.

Although the internet-only banks managed to stay above that recommended threshold, their ratios were far lower than those of traditional commercial banks.

The average capital adequacy ratio of 19 commercial and state-run banks stood at 15.34 percent as of the end of June, down 0.07 percentage points from the previous quarter.

Kakao Bank said that its financial position will improve when Kakao, the operator of popular instant messenger Kakao Talk, becomes the top shareholder of the bank.

“When Kakao officially becomes the largest shareholder, we will go on to raise capital, possibly by the end of this year,” said a spokesperson at Kakao Bank.

In July, the Financial Services Commission (FSC) approved a request by Kakao to raise its stake in Kakao Bank up to 34 percent.

The prospects for rival K bank, however, remain dimmer.

KT, which also applied for 34-percent ownership approval earlier this year, in May decided not to pursue the stake increase in K Bank as it is under investigation by the Fair Trade Commission for antitrust violations.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]


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