A hurdle too high
When the Financial Supervisory Commission announced a preapproval of two internet banks on November 29, 2015, the media responded with special interest in the first new bank in the 24 years since Peace Bank of Korea opened in 1992. The media sent encouragement that the internet banks would bring the “catfish effect” to energize the stagnant banking sector.
A year has passed, and K Bank, the first internet bank, is about to start business next month. Kakao Bank is planning to apply for full approval next month. But now, there is little anticipation or support for their new beginning. Instead, there are voices of concerns and worries. Now that the athletes are ready to race at the start line and waiting for the signal, there is a hurdle that they cannot jump over. It is the Article 15 of the Banking Act on separate regulations on banking and industrial capitals.
Internet banks aspire to provide innovative service by combining financial and ICT technologies, initiated by ICT companies. But KT holds 9 percent of K Bank shares, and Kakao has 10 percent stake to Kakao Bank. Per the principle of separation of banking and industrial capitals, industrial capital can hold up to 10 percent of bank stocks or 4 percent of voting stocks.
The government and ruling party sought revision on the Banking Act in the 19th Assembly, but it did not happen. At this rate, internet banks would be dominated by major financial shareholders and IT companies would only have a supplementary role. The plan for capital increase to help internet banks operate properly wouldn’t go smoothly. The entities preparing for internet banks are desperately waiting for the National Assembly to act.
Fortunately, the National Assembly has begun to discuss easing the separation of financial and industrial capital. The Policy Committee of the National Assembly convened a subcommittee on November 17 to review four bills on the issue. The opposition party also supports the purpose of internet banks and proposed a special bill to allow IT companies to hold up to 34 percent of the banking shares. This is major progress from the stalemate of the 19th Assembly.
A worrisome variable is the scandal involving Park Geun-hye and Choi Soon-sil that suck in all issues like a blackhole. At the policy committee meeting on Nov. 16, some members raised an allegation that Cha Eun-taek played influence in pre-approval of K Bank. The allegation must be clarified. But it would be desirable to remove or lower the hurdle for now. We cannot let the catfishes die. The National Assembly should save them. Only then would the banking big bang begin, and the benefits of the banking big bang would go to the customers.
JoongAng Ilbo,Nov. 17, Page 33
*The author is a business news reporter of the JoongAng Ilbo.