Consortia compete for 1st Internet bank license

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Consortia compete for 1st Internet bank license

The government will be accepting applications for Internet-only banks for the next two days.

If the process goes smoothly, Korea’s first Internet bank will start business in the first half of 2016. This would be the first time in 23 years that a new bank has opened for business in Korea.

The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) will be accepting applications between 9 a.m. today and 6 p.m. Thursday.

An initial screening will be made by the FSS including evaluation from outside experts before a final decision is made by the FSC. The evaluation will be focused on business plans, shareholder structure, service plans for financial consumers, as well as contribution to the development of the local financial industry. Also to be considered is the possibility of expanding to overseas markets. The initial pick of one or two businesses will happen in

Currently, there are four consortia that are said to be vying for the Internet bank license.

The so-called Kakao bank consortium is led by the nation’s No. 1 mobile messenger company, Kakao. KB Kookmin Bank and Korea Investment Holdings is said to be participating. Another led by the online shopping company Interpark has nine other members: SK Telecom, Industrial Bank of Korea (IBK), NH Investment and Securities, Hyundai Marine & Fire Insurance, Welcome Savings Bank, NHN Entertainment, GS Homeshopping, BGF Retail and Yello Financial Group.

A KT consortium, led by the No. 2 mobile carrier, has 12 other members, including Woori Bank, Hyundai Securities, Hanwha Life Insurance, GS Retail, KG Inicis, KG Mobilians, Danal, Posco ICT, Ezwelfare, Yap, 8 Percent and Infovine.

The last consortium, called 500V, is said to be made up of small and medium-size startup companies. However, the members of the consortium are not known.

The Internet bank will engage in the same businesses as commercial banks, including processing deposits, loans and money wiring. The only difference is it will operate mostly on the Internet. It will also have little or no brick-and-mortar branches.

It is intended to operate 24 hours a day and 365 days a year.

Since it will have no physical branches, it is expected to provide better services at a lower cost than existing commercial banks.

Nonfinancial companies - including IT companies like Kakao and SK Telecom - can own no more than 4 percent of the shares in the new Internet bank. These companies, however, can raise their stakes to 10 percent but on the condition that they will not have voting rights for the additional 6 percent.

These companies also have to meet the FSC’s fiscal soundness standards, including a debt ratio of less than 200 percent. Banks, brokerages and insurance companies are qualified to hold the majority stake in the Internet bank.

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