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Screening procedures 'not problematic' for online-only banks: chief regulator

All Headlines 16:25 June 03, 2019

SEOUL, June 3 (Yonhap) -- The head of the financial regulator said Monday there were no problems in a screening process that rejected all bids for online-only bank licenses, calling for bidders to better prepare for the next round of applications.

In an unexpected move, the Financial Services Commission (FSC) late last month rejected applications by two consortia to set up the nation's third and fourth internet-only banks. One consortium is backed by financial technology firm Viva Republica and the other is led by brokerage Kiwoom Securities.

"It is difficult to say that there was a problem in the screening procedures," FSC Chairman Choi Jong-ku told reporters.

The two consortia failed to meet certain standards in terms of both innovation and fundraising plans.

FSC Chairman Choi Jong-ku speaks during a meeting on financial innovation on June 3, 2019. (Yonhap)

The FSC will not change the screening procedures but will help bidders better prepare to apply, Choi said.

Two current internet-only banks -- K-Bank and Kakao Bank -- were launched in 2017, challenging traditional banks in South Korea and forcing them to cut commission fees and revamp their online and mobile banking services.

Last September, the National Assembly passed a bill that allows a non-financial firm to boost its stake in an internet-only bank beyond the 4 percent ownership ceiling.

The ceiling was intended to prevent conglomerates from exploiting a bank as a private vault. However, critics said it has discouraged technology firms from making inroads into the financial sector.

kdh@yna.co.kr
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