Korea’s internet-only banks could lose out

Author: Brian Yap | Published: 4 Oct 2016

Political wrangling in Korea over the proposed revision of the country’s Banking Act has raised the possibility of a veto of the bill, with growing fears of a potential plunge in investment into internet-only banks.    

The Financial Services Commission (FSC) granted preliminary licences to run internet-only banks last November to two consortia led by the country’s internet giant Kakao and telecom operator KT respectively. This came five months after the regulator announced plans to establish internet-only banks, and that it would submit a bill to the National Assembly to have the Banking Act revised to allow non-financial companies to own up to a 50% stake in these banks.    

Warnings have been issued, however, regarding the negative impact of a potential veto of the revision bill - from the country’s opposition party, which has heavily opposed the legislation -...