FSC to accept internet bank bids

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FSC to accept internet bank bids

Internet-only banking license applications are being accepted again, but this time around the regulator will be providing consulting services to those seeking approval.

It is unclear at this point whether applicants previously rejected will be permitted to try again.

The Financial Services Commission (FSC) on Tuesday said it will accept proposals for the internet-only banking licenses between Oct. 10 and Oct. 15. The review will take 60 days before a final conclusion is reached.

The review process will be the same as before, with a group of experts in IT, accounting, law, finance, consumer protection, fintech and risk management examining the applications for three days.

The Financial Supervisory Service (FSS) will be in charge of forming the group, though the exact membership will not be disclosed to maintain fairness.

Categories evaluated include: ability to secure the minimum capital of 25 billion won ($21 million); the shareholding structure, including the largest-shareholder; and the business plan, including contributions to innovation, inclusiveness and contributions to financial system stability.

The FSC said it will not interfere in the evaluation process and respect the final decisions. This time around, though, the FSS will actively provide advice to increase the probability of success.

“The FSC and FSS will help [applicants including new bidders] throughout the entire process fully,” said Jeon Yo-seop, head of banking division at the FSC.

While previously the applicants were only able to present their case to the evaluators once, this time the government authorities plan to have several meetings will them so they can better make their case.

In May, FSC Chairman Choi Jong-ku expressed surprise when the team of experts did not approve Viva Republica, the company that developed Toss, and Kiwoom Securities.

The market was expecting at least one of the two to get the nod and that the third internet-only bank, the first in two years, would be greenlighted.

During the Korea JoongAng Daily forum in May, Choi reaffirmed the FSC’s commitment to introduce at least one additional internet-only bank this year.

“We will resume the procedure,” Choi said. “The two bidders have come to know their weak points, so if they try again, I expect at least one of them to make it next time.”

He also said he expects Shinhan Financial Group, which previously was planning to participate in the bid jointly with Viva Republica, to join the process.

“Considering the country’s [gross domestic product], the appropriate number of internet banks should be four,” said Jeon, the head of banking division at the FSC.

However, neither Viva Republica nor Kiwoom Securities has yet to announce publicly whether they plan to rry their luck again.

Both Viva Republica and Kiwoom on Tuesday said they are internally discussing the issue.

BY LEE HO JEONG [lee.hojeong@joongang.co.kr ]
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