K bank to issue new shares in an attempt to stay in business

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K bank to issue new shares in an attempt to stay in business

The board of K bank, Korea’s first internet-only bank, agreed Tuesday to issue new shares worth 594.9 billion won ($490 million) in an attempt to keep the cash-strapped company afloat.

The newly issued shares will be offered proportionally to existing shareholders, the online bank said. The deadline for purchase is June 18. If all shareholders buy in, K bank’s total asset will reach 1.1 trillion won.

K bank has been effectively shut down since last year due to a capital shortage.

It suspended sales of major funds last April and shut down its loan department last June. Its net loss reached 1.08 million won last year.

KT, which holds 10 percent of the online bank, sought to raise its stake to 34 percent last year but was blocked due to regulations that prohibit a company that has a history of antitrust violations from owning more than 10 percent of a financial firm.

A legal revision, which K bank was relying on, failed to pass the National Assembly last month. A 590 billion won capital raising exercise fell apart last year.

The National Assembly said it will readdress the issue after the general elections on April 15.

If the National Assembly fails to pass the revised bill again, K bank said it will come up with alternative plans such as having a subsidiary of KT acquire the internet bank. BC Card may be one of the candidates.

K bank appointed Lee Moon-hwan, former CEO of BC Card, as its new chief last month. KT owns 69.54 percent of the card company.

Currently, the largest stakeholder of K bank is Woori Bank, with 13.79 percent, and NH Investment & Securities owns a 10 percent stake.

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

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