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A few weeks after the Korean financial regulator rejected its request to create the third and fourth national banks in the country, Toss Bank may have to draw up a new list of strategic investors to try its luck.
On June 9, the Financial Services Commission highlighted the problems with Toss Bank's ownership structure and lack of a realistic fundraising plan that led to its decision to reject the application.
On May 26, the FSC refused to issue new operational licenses for the two competitors of the Internet banks only – the Toss Bank consortium led by Viva Republica, operator of the popular Toss payment and transfer platform, and Kiwoom Bank, led by the local broker Kiwoom Securities.
"Toss Bank proposed in its latest application a fundraising plan focused on a limited group of financial investors, despite its state of unstable capital structure," said a FSC official.
"If the consortium does not solve the problem, we can not issue the license, even if they develop a great plan," added the manager.
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Yonhap |
In its plan, Toss Bank announced that it would start with a capital of 250 billion won ($ 212 million) and increase that amount up to 1.2 trillion won in three years. The FSC expressed skepticism in view of the net loss of 44.5 billion won by Toss FY 2018.
The FSC also criticized the shareholding structure of Toss Bank which places Viva Republica as majority shareholder with a 60.8% stake, followed by Korean strategic owners with a combined stake of 19.9% and foreign venture capital holding 19.3%.
The structure – which critics said was "unstable" – was a result of Shinhan's decision to withdraw from the consortium, fueling doubts about its ability to manage real accounts.
Critics also pointed to the lack of an emergency plan for capital management at Toss Bank after investors withdrew from profit-taking.
At the same time, Kiwoom Bank, which has been rejected for its "lack of feasibility and innovation," appears to face fewer obstacles than Toss. It also has strong partners, including the country's largest mobile operator, SK Telecom, and the 11th largest e-commerce operator.
Toss has not yet confirmed his participation in the next contest, but would have reviewed the rejected plan while "evaluating the situation".
The FSC will receive online banking requests during the third quarter of this year. The results of the review should be known in the last quarter of 2019.
There are only two players in the online banking market only – K Bank and Kakao Bank. Both were launched in 2017 and reshaped the Korean banking market to become more technology-centric and mobile-centric.
By Jung Min-kyung / The Korea Herald ([email protected])
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