Gov’t rejects all bids for internet-only bank licenses

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Gov’t rejects all bids for internet-only bank licenses

The country’s financial authorities rejected both bidders - Viva Republica and Kiwoom Securities - for approval to open an internet-only bank on Sunday, saying that neither company had the financing and innovation to successfully open an online bank.

The two teams had been vying to operate Korea’s third and possibly fourth internet-only banks, after Kakao Bank and K bank. The government had said it was willing to grant up to two licenses.

The FSC and the Financial Supervisory Service said that both consortia fell short of the criteria to run internet-only banks in a screening process conducted by a committee consisting of outside experts in financial, accounting, technology and legal circles.

“[The committee] refrained from recommending approval because Kiwoom Bank’s proposal lacks feasibility and innovation while Toss Bank has insufficient ability to raise capital as the lead investor,” the regulators said in a joint statement.

Choi Jong-ku, chief at the FSC, stressed that the agency will continue to be on the lookout for new bidders by launching a new round of assessment this year.

“The evaluation process for internet-only bank licenses will be resumed within this year,” Choi told reporters on Sunday. “The two consortia that have failed to make it this time will be allowed to apply again after they address their shortcomings.”

The FSC plans to open a new procedure in the third quarter and grant licenses during the fourth quarter, when there is a viable contender.

A total of eight investors were financing Toss Bank. Viva Republica was set to hold the majority, with a stake of 60.8 percent. Hanwha Investment & Securities would have owned 19.9 percent and a number of international venture capital investors - including Altos Ventures, Goodwater Capital and Ribbit Capital - were set to take the remaining 19.3 percent.

Shinhan Financial Group, the country’s largest financial holdings unit, announced in February that it was going to work with Toss, but later pulled out because of differing views on the operation of the bank.

Shinhan’s departure may have affected the consortium’s financial stability.

As for Kiwoom Securities, its partners included SK Telecom, Hana Financial Group and 11st, a major e-commerce unit spun off from SK Telecom.

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