'Shinhan's exit costs Viva internet banking'

A woman passes by Viva Republica's office in Gangam, Seoul, May 26 when its proposal for Toss internet bank was rejected. Yonahp

By Park Hyong-ki

Kiwoom Securities' business proposal for an internet bank lacked specific details on how it will operate "differently and innovatively" with its strategic partners.

And Viva Republica's Toss Bank did not specify how it would run its internet bank without a single strategic partner, and raise capital given its negative cash flow.

These were the reasons the Financial Services Commission (FSC) rejected their proposals last month, it explained Sunday.

"Without sufficient documents supporting their internet bank plans, they were not given the green light," said an FSC official.

This comes as FSC Chairman Choi Jong-ku said last week that the regulator and its external committee will not change the way they evaluate internet bank proposals. He added they will abide by strict principles and standards.

They rejected the applications to open new internet banks May 26.

The FSC said Kiwoom's proposal for Kiwoom Bank was not innovative, and Viva's Toss Bank raised concerns over governance and financing.

The announcement was unexpected as Choi had signaled the FSC could select up to two applicants to launch internet banks here, after K bank and Kakao Bank.

Shinhan Financial Group's exit from the Toss consortium ultimately cost Viva, industry sources say.

Shinhan and Viva had a disagreement over Toss' business model. Immediately after Shinhan's exit, Hyundai Marine & Fire Insurance, Cafe24 and Korea Credit Data left the Toss consortium.

The FSC said it is considering accepting new applications for new internet banks in September, or by early October.

Neither Kiwoom nor Viva officially announced whether they will reapply in the latter half.

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