By Park Hyong-ki
Kakao and KT are expected to inject more capital into their internet banks as lawmakers passed a revision Thursday, enabling tech giants to increase their ownership in mobile lenders, according to analysts and industry sources.
The National Assembly voted in favor of a partially amended version of the Banking Act, that will allow nonfinancial companies, or industrial capital, to exercise voting rights of up to 34 percent in shares they hold in internet banks, drastically up from 4 percent.
Also, the revision will only allow companies with more than half of their businesses focused on information, communication and technology to hold as much as 34 percent of the rights of internet banks.
Under the current law, nonfinancial companies cannot own more than a 10 percent stake in banks. They are restricted from exercising voting rights in excess of 4 percent.
The passage will pave the way for Kakao and KT not only to become the biggest shareholders of their internet banks, but also further finance them for expansion. Other tech heavyweights such as SK Telecom are also expected to jump into the internet banking business, analysts say.
Kakao has a 10 percent stake in Kakao Bank, whose biggest shareholder is Korea Investment Holdings with a 58 percent stake. KT has an 8 percent stake in K Bank, whose key shareholders include Woori Bank and Hanwha Life Insurance.
Even though the tech giants developed and launched those banks, they were restricted from exercising management of them or investing in them for expansion.
"The revision will enable internet banks to raise capital from the tech companies," said Yoo Seung-chang, an analyst at KB Securities.
Kakao and KT have indicated they would further seek to invest in their internet banks and develop more services should certain regulatory hurdles get eliminated.
"The deregulation is considered the starting point at which Kakao can increase investment and work on developing a new service," said Jaden Hwang, senior manager of Kakao Bank.
The government had been reluctant to ease the law separating commerce and finance capital to block chaebol, or family-run conglomerates, from owning or running conventional or internet banks.
Some lawmakers of the Democratic Party of Korea refused to relax this as big companies, whether in technology or manufacturing, would abuse their power and run internet banks as if they are their personal coffers.
Kakao and KT are expected to inject more capital into their internet banks as lawmakers passed a revision Thursday, enabling tech giants to increase their ownership in mobile lenders, according to analysts and industry sources.
The National Assembly voted in favor of a partially amended version of the Banking Act, that will allow nonfinancial companies, or industrial capital, to exercise voting rights of up to 34 percent in shares they hold in internet banks, drastically up from 4 percent.
Also, the revision will only allow companies with more than half of their businesses focused on information, communication and technology to hold as much as 34 percent of the rights of internet banks.
Under the current law, nonfinancial companies cannot own more than a 10 percent stake in banks. They are restricted from exercising voting rights in excess of 4 percent.
The passage will pave the way for Kakao and KT not only to become the biggest shareholders of their internet banks, but also further finance them for expansion. Other tech heavyweights such as SK Telecom are also expected to jump into the internet banking business, analysts say.
Kakao has a 10 percent stake in Kakao Bank, whose biggest shareholder is Korea Investment Holdings with a 58 percent stake. KT has an 8 percent stake in K Bank, whose key shareholders include Woori Bank and Hanwha Life Insurance.
Even though the tech giants developed and launched those banks, they were restricted from exercising management of them or investing in them for expansion.
"The revision will enable internet banks to raise capital from the tech companies," said Yoo Seung-chang, an analyst at KB Securities.
Kakao and KT have indicated they would further seek to invest in their internet banks and develop more services should certain regulatory hurdles get eliminated.
"The deregulation is considered the starting point at which Kakao can increase investment and work on developing a new service," said Jaden Hwang, senior manager of Kakao Bank.
The government had been reluctant to ease the law separating commerce and finance capital to block chaebol, or family-run conglomerates, from owning or running conventional or internet banks.
Some lawmakers of the Democratic Party of Korea refused to relax this as big companies, whether in technology or manufacturing, would abuse their power and run internet banks as if they are their personal coffers.
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