The financial authorities are expected to focus on checking risk factors tied to reliance on the domestic virtual asset exchange Upbit during the preliminary review for listing Kbank, which is pursuing an initial public offering (IPO). Kbank has had a real-name account partnership with Upbit since 2020, and 16% of Kbank's deposits are funds related to Upbit.
According to the financial sector on the 29th, Kbank is expected to file for a preliminary KOSPI listing review with the Korea Exchange (KRX) within the year. This is Kbank's third IPO attempt.
Under Korea Exchange (KRX) rules, once a preliminary listing review is requested, the review must be completed within 45 business days from the filing date. Depending on circumstances, however, the exchange review can take two to three months. The Financial Supervisory Service then reviews the securities registration statement.
The financial authorities plan to closely review whether Kbank has thoroughly detailed investment risk factors, including its concentration of funds from Upbit, in the securities registration statement. The financial authorities also checked for the possibility of a temporary liquidity issue at Kbank if the Upbit partnership ends, and for the bank's contingency plan.
The industry has consistently raised concerns about Kbank's reliance on Upbit. Kbank rapidly grew deposits after entering a real-name account partnership with Upbit in June 2020. As of the second quarter this year, of Kbank's total deposit balance of 26.8 trillion won, about 4.4 trillion won (16.42%) are Upbit escrow funds. This means 4.4 trillion won in deposits could flow out at once if the Upbit partnership ends. Compared with 2021, when it was about half, the ratio has fallen significantly but remains high.
Kbank recently succeeded in extending its partnership with Upbit. The contract period agreed by both sides runs until Oct. next year. Kbank will again have to consider extending the business partnership with Upbit next year. The political discussion on easing the "one exchange–one bank" regulation is another variable.
The financial authorities believe Kbank will not immediately fall into a liquidity crisis even if it ends its partnership with Upbit. The financial authorities plan to continue managing and supervising Kbank's Upbit-related risks.