Assembly to review internet bank deregulation
A parliamentary committee is set to review bills on allowing non-financial firms to take a bigger stake in internet-only banks Friday as the government seeks to promote innovation in the financial sector.
The current banking law prevents such firms from owning more than a 4 percent stake in a bank. The Moon Jae-in government hopes to ease the ownership limit for internet-only banks.
The ruling Democratic Party (DP) wants the enactment of a special law that calls for boosting the ownership cap in web-only banks to 25-34 percent. But the main opposition Liberty Korea Party proposed a revised bill to boost the ceiling to 50 percent.
The current restriction on bank ownership is aimed at preventing family-owned conglomerates from gaining control of lenders on concerns that they could easily get credit for their expansions.
Two internet-only banks - K-bank and Kakao Bank - were launched last year, but they have faced difficulty for sustainable growth as their two biggest shareholders, KT and Kakao, are unable to issue shares for the banks’ capital increase. The national policy committee said it plans to combine lawmakers’ respective bills on web-only banks for review before putting them to a vote next Thursday.
Some DP lawmakers still oppose deregulation on internet-only banks on concerns that the move could prompt conglomerates to use a bank as their private vault.
Apparently mindful of such criticism, the National Assembly is studying ways to restrict internet-only banks from extending loans to conglomerates, according to parliamentary and financial sources.
“If there are grave concerns about conglomerates’ private coffers, it might be acceptable to limit internet-only banks’ lending to larger firms,” said an official at a financial authority.