Opening New Doors
The Korean government has decided to allow Information and Communication Technology (ICT) companies to enter the Internet bank market while restricting conglomerates, called “chaebols,” from doing so. Also, it is expected to ease regulations on the separation of banking and commerce in order for ICT companies to enter the market. Under the current banking law, non-financial assets of 2 trillion won (US$1.84 billion) were considered industrial capital. Therefore, the government is considering the idea to raise the figure from a total of 2 trillion won (US$1.84 billion) to 5 trillion won (US$4.59 billion) or not to put restrictions on owning stake in industrial capital for Internet banks.
On April 16, the task force for the introduction of Internet banks presented a plan to ease regulations on the separation of banking and commerce, which is a precondition for the establishment of Internet banks, in a public hearing being held at the hall of the Korea Federation of Banks in Myeong-dong, Seoul. Based on the plan, the financial authorities will determine the final policy in June.
The task force concluded that the government should stick to the principle of the separation of banking and commerce that prevents the centralization of capital of conglomerates and their arbitrary use of capital. Therefore, it should rule out conglomerates but allow ICT companies to enter the Internet bank market.
Meanwhile, Financial Services Commission (FSC) Chairman Lim Jong-ryong said in the event, “This is the right time to adopt Korean Internet banks. We hope that this would be the last attempt to introduce Internet banks. We need a review of regulations on the separation of banking and commerce that we have held fast. Also, we should change the practice to confirm real names by only meetings, which have been allowed for decades.”