South Korea's National Assembly will hold a second forum on establishing a fourth internet-only bank on August 25. The Financial Services Commission approved expanded face-to-face business operations for the country's three existing internet banks on July 1, allowing corporate loan assessments and collateral inspections through in-person channels. Political committees are advancing the new bank licensing debate as a key agenda item for the second half of the year, while financial regulators maintain a cautious stance on issuing new licenses and focus on removing restrictions for Kakao Bank, K Bank, and Toss Bank.
National Assembly Schedules August 25 Forum on Fourth Internet Bank License
The second National Assembly forum on the fourth internet-only bank will take place on August 25. The event was originally considered for last month but was postponed due to the June 3 local elections and other political schedules. The forum is currently in the participant recruitment stage, with expected attendees including representatives from the Financial Services Commission, Financial Supervisory Service, and fourth internet bank consortium members, similar to the first forum held in early April.
National Policy Committee members plan to make the fourth internet bank establishment a key agenda item for the second half of this year. The second forum is expected to advance discussions beyond the first forum's focus on the need for relaunching the initiative, moving toward licensing standards and structural design.
Financial Services Commission Expands Face-to-Face Business Scope for Existing Internet Banks
The Financial Services Commission approved measures on July 1 to expand the face-to-face business scope for internet banks. The regulatory change opens corporate finance operations for the three existing internet banks. The FSC issued a legal interpretation that meetings with corporate representatives and executives during corporate loan assessments constitute "on-site inspections." Through amendments to banking supervision regulations, internet banks can now conduct collateral status checks, delinquent loan management, and debt restructuring consultations in person after prior reporting.
The three internet banks' individual business operator loan balances reached 7.53 trillion won at the end of Q1, representing approximately 50% growth compared to 5.02 trillion won in the same period of the previous year. The banks are concentrating on expanding individual business operator lending.
Banking Industry Shows Limited Interest in Fourth Internet Bank Investment
The banking sector's response to the fourth internet bank remains subdued. Financial holding companies managing common equity tier 1 (CET1) ratios while maintaining shareholder return rates view fourth internet bank investment as unlikely to efficiently improve return on equity (ROE).
Woori Bank's K Bank stake sale represents a notable example. Woori Bank sold part of its K Bank holdings on the exchange on the day of K Bank's listing in March. Market observers expect Woori Bank to proceed with additional sales in September after the lock-up period ends.
A banking industry official stated that the mid-to-low credit borrower ratio requirement will increase from 30% to 35% by 2028, creating significant constraints on the fourth internet bank's initial operations. The official noted that the business requires capital investment in the trillion-won range and will need additional regulatory relief or incentives from authorities or the National Assembly.
FAQ
What is the purpose of the August 25 National Assembly forum on South Korea's fourth internet bank?
The second forum will advance discussions on licensing standards and structural design for a potential fourth internet-only bank. The National Policy Committee is making this a key agenda item for the second half of the year, moving beyond the first forum's focus on whether to relaunch the initiative.
How did the Financial Services Commission expand internet banks' business operations on July 1?
The FSC approved expanded face-to-face business scope, allowing internet banks to conduct corporate loan assessments through in-person meetings with representatives and executives. The regulatory changes also permit collateral inspections, delinquent loan management, and debt restructuring consultations in person after prior reporting, opening corporate finance operations for Kakao Bank, K Bank, and Toss Bank.
