FSC eases regulations for new financial firms

The country’s financial regulatory agency will revamp the way it licenses financial businesses by lowering the capital requirement and establishing a dedicated committee to handle new business approval.

The Financial Services Commission said on Wednesday that a committee consisting of nine outside experts will be in charge of assessing applications for banking, insurance and securities licenses in a bid to increase transparency and efficiency.

The focus was on whether the regulator will accept new bidders to operate as internet-only banks after the launch of two online-only banks - K Bank and Kakao Bank - last year.

“The two internet-only banks grew in size and contributed to promoting competition in the industry,” said Choi Hoon, director general of the banking and insurance bureau at the Financial Services Commission.

“So, we will actively consider accepting more players as internet-only lenders as long as there is market demand,” he said.

Asked if any company expressed its intention to enter the internet-only banking industry, Choi answered “No, I haven’t yet received any applications.”

The two existing internet-only banks have 5.77 million clients between them, with total savings at 6.6 trillion won ($6.1 billion) and loans at 6 trillion won as of April 19, according to the regulator.

The insurance business has long been considered particularly difficult to enter since the regulator requires at least 30 billion won in capital to start the business.

The agency said that the limit will be lowered for applicants who specialize in providing small, short-term insurance services, adding that a more specific standard will be released later.

The regulator will also ease regulations and the capital requirement for web-only insurers to attract more players. The capital requirement could go down to 20 billion won, it said.

To make the application process more convenient, web-only insurers will be allowed to send digitized copies of insurance terms.

In the securities sector, the Financial Services Commission is considering lessening capital requirements for brokerages that exclusively deal with investment in so-called venture funds, or funds for emerging start-ups.

The Financial Services Commission, however, refrained from touching upon one of the most controversial regulations that bars non-financial companies such as tech firms from owning more than 10 percent of a financial company. A non-financial unit can own up to 10 percent of a financial company, but can only vote on a 4 percent stake.

Lowering the barrier to entry for prospective financial companies was one of the top 100 policy items in President Moon Jae-in’s economic agenda.

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