K bank legislative rescue fails

A last chance legislative fix for K bank failed on Thursday.

The bill, which passed the Legislation and Judiciary Committee a day earlier, was voted down by the full National Assembly.

Current law doesn’t allow an IT company that has a record of antitrust law violations over the past five years to acquire a controlling stake in a financial company.

The revision would have removed the part about the antitrust law violation.

It failed in the parliamentary plenary session, with 82 lawmakers voting against it and 75 for it.

They said they objected because it was written to favor one company in specific.

K bank, which opened in 2017 as the country’s first internet-only bank, has been struggling to stay afloat due to lack of capital. As a result, it started to suspend sales of major funds last April. It shut down its entire loan department last June.

KT sought to raise its stake in the company last year to 34 percent from 10 percent. A total of 590 billion won was raised in the exercise.

The plan hit a roadblock last April when the Financial Services Commission suspended reviewing the adequacy of KT as a top shareholder as the Fair Trade Commission started investigating the company for a price-fixing case in 2016. The telecom company was fined 700 billion won ($615 million) for violating the Fair Trade Act.

The deal was off.

The blockage of fresh capital inflow put K bank in near shutdown for nearly a year, resulting in an accumulated 63.5 billion won net loss as of the third quarter last year.

Rival Kakao Bank, which initiated its business three months after K bank, has more than 11 million users. K bank had 1.2 million users as of February. Its loans were 1.35 trillion won at the end of 2019, while Kakao Bank’s totaled 15 trillion won.

K bank put on a brave face through Thursday morning, saying it would seek to normalize its operations by resuming the loan program. After the vote, it said that it would be seeking other ways of raising capital, such as through a KT subsidiary without a violation or by attracting a new investor.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]