Korea’s first internet banks clouded by downgrade fears

Author: Brian Yap | Published: 8 Dec 2015

Counsel in Korea are concerned about the potential downgrading of the country’s first internet-only banks, whose tier designation is subject to the outcome of proposed amendments to the Banking Act.

The Financial Services Commission (FSC) announced its plan to introduce internet-only banks to be operated by the country’s internet giant Kakao and telecom operator KT Corporation in June.

According to the plan, an internet-only bank’s minimum required capital is 50 billion won ($45 million), half of that of a general commercial bank.

But lawyers in the country point to the political wrangling over the amendment and the possible designation of internet-only banks as second-tier savings banks if it gets voted down by Korea’s opposition party.    

"If the bill...