The four consortiums that had bid for the fourth internet-only bank were reportedly eliminated after being deemed to lack the controlling shareholders' capital strength, making their capacity to raise capital uncertain. Operating an internet bank requires a large capital injection, but the controlling shareholders' capital strength was judged insufficient. The fourth internet-only bank is expected to be revived only the year after next, once the financial authorities complete their organizational overhaul.
The Financial Services Commission said on the 17th that it held a regular meeting and rejected preliminary approval for the fourth internet-only bank for four consortiums: Soho Bank, Soso Bank, Podo Bank, and AMZ Bank. The financial authorities said, "Based on evaluations by the External Evaluation Committee and the Financial Supervisory Service's review, all four applicants were generally found lacking in the stability of their funding plans and the feasibility of their business plans."
Soho Bank had been considered the frontrunner to pass the preliminary approval for the fourth internet-only bank. The Soho Bank consortium was built around Korea Credit Data and included major banks such as Hana, Woori, and NH Nonghyup Bank, as well as Busan Bank, OK Savings Bank, Woori Card, Heungkuk Life, and Heungkuk Fire&Marine Insurance. On the IT side, LG CNS, ITCEN, Megazone Cloud, and T-Systems were listed. It was assessed to be far superior in shareholder composition and capital strength compared with when the three existing internet-only banks (Kakao, Toss, and Kbank) applied for preliminary approval in the past. It also aligned with President Lee Jae-myung's campaign pledge for an internet bank specializing in mid-rate loans for vulnerable groups.
However, the financial authorities and the External Evaluation Committee were said to have judged the capital strength of Korea Credit Data, the controlling shareholder of Soho Bank (33.5% equity), as insufficient. In a crisis, the controlling shareholder must inject additional capital, and they concluded it was uncertain whether Korea Credit Data could carry out a capital increase. Korea Credit Data reportedly received negative marks as well because it posted an operating loss of 38 billion won last year, an increase of 31% from the previous year.
Soso Bank, which billed itself as an internet-only bank specializing in small business owners and small corporations, was also reportedly assessed as lacking in controlling shareholder suitability and capital strength. When Soso Bank applied for preliminary approval, its controlling shareholder had not been decided, and it was said to have been finalized just before the External Evaluation Committee's review. Soso Bank proposed 320 billion won in capital, 100 billion won more than the capital structure assembled by Toss and Kbank when they applied for preliminary approval.
In financial circles, some are saying the authorities may have applied a stricter review because the initiative was promoted under the previous administration. A financial industry official said, "In the end, I think it felt burdensome to carry on a previous administration's project." The financial authorities drew a line, saying, "It is inappropriate to link the review results to the launch of the new administration."
Both Soho Bank and Soso Bank expressed their intention to try again for the fourth internet-only bank. However, with the financial authorities set for an organizational overhaul, relaunching the process is expected to take considerable time. If the reorganization bill is designated as a fast-track item, it can be processed within up to 330 days. That would mean the organizational overhaul would get underway in the second half of next year. A financial industry official said, "If the financial authorities proceed with reorganization, the question of which body will take charge of pushing the fourth internet-only bank could become an issue," adding, "It seems likely it will be relaunched after the reorganization."