Market reacts to chance of bank rules changingCompanies connected to internet-only banks have seen their share price rise after President Moon Jae-in suggested Tuesday that controversial regulations limiting nonfinancial companies from owning larger stakes in banks need to be reviewed.
Woori Bank shares closed up 3.07 percent on Wednesday compared to the previous day. Woori Bank is one of three major stakeholders of K bank, Korea’s first internet bank.
K bank, which opened in May last year, has 20 stakeholders including telecommunication company KT and NH Investment & Securities.
Woori owns a 13.79 percent stake in the internet bank while KT and NH Investment & Securities own 10 percent each.
KT shares on Wednesday closed 0.17 percent lower than the previous day at 28,700 won ($25.62) but during trading went up to as much as 28,900 won or 0.5 percent more than the previous day. KT earlier in the day remained higher than on Tuesday but dipped at the last minute before the market was closed.
NH Investment & Securities, which started the day positively, went up as much as 13,100 won or 1.5 percent higher during the day, ended up flat at 12,900 won.
The situation was the same for Kakao Bank. IT company Kakao is the second-largest stakeholder after Korea Investment & Securities. Kakao shares closed 0.83 percent down at 119,000 won on Wednesday. During the day they went up as much as 3.7 percent to 124,500 won. The share price tumbled after investors went on a selling spree to profit from the increase just an hour before the market closed.
Neither of the two internet banks is traded publicly on the stock market. However, Kakao Bank, in celebrating its first anniversary last month, announced it plans to be listed on the Korean stock market in 2020 in one of its efforts to secure larger investments. The two internet banks, despite initial success, have been struggling to get a larger pool of investments, especially from its nonfinancial stakeholders due to the government regulations. As a result, they have been struggling to launch new loan products.
As the two internet banks have been suffering from losses despite their initial popularity last year, Moon on Tuesday urged the government to consider easing the regulations on internet banks.
Currently, there are reform bills that propose increasing the stake that nonfinancial companies are permitted to hold in internet banks from the current 4 percent to as much as 50 percent.
BY LEE HO-JEONG [firstname.lastname@example.org]