South Korea is to allow new domestic players to enter its banking industry for the first time in 30 years, a move meant to boost competition in a sector dominated by five major lenders.
The country’s financial regulator would allow financial firms to apply for nationwide commercial bank licenses, the South Korean Financial Services Commission (FSC) said in a statement yesterday, the first time it is doing so since 1992. The move is seen paving the way for competition that could help lower interest rate costs for consumers.
Lenders made record profits during the COVID-19 pandemic and “paid their interest income as bonuses and dividends for employees and shareholders rather than returning it to citizens,” the FSC said in the statement.
Daegu Bank, a regional banking unit of DGB Financial Group Inc, might become the first firm to take advantage of the expanded rule, with an eye to transforming into a nationwide bank, it said.
The government’s move came after South Korean President Yoon Suk-yeol earlier this year criticized banks for having a “money feast”: booking “easy” profits from the gap between interest rates on deposits and loans, while rewarding their executives with big bonuses as borrowers struggled to pay high interest rates.
Since then, financial regulators launched a task force and the country’s antitrust watchdog probed major lenders to assess whether they colluded on loan rates.
The top five South Korean lenders — Kookmin Bank, Shinhan Bank, KEB Hana Bank, Woori Bank and NongHyup Bank — account for about 63 percent of the country’s total 4,115 trillion won (US$3.16 trillion) in bank assets and about three-quarters of deposits, the FSC said.
The lenders posted a combined 12.7 trillion won in net income last year, surging about 18 percent from the prior year. They handed out 2 trillion won in bonuses to employees last year, it said.
Despite the removal of one major hurdle, smaller firms still face an uphill battle entering an industry dominated by giant competitors, SK Securities Co analyst Seol Yong-jin said.
“Even though regional banks can get nationwide commercial banking licenses, whether they can get nationwide clients is a different issue — I doubt it,” Seol said by telephone.
South Korean banks are not alone in facing criticism for excessive profits during a time of surging inflation and high costs for consumers. British lawmakers have criticized the largest banks for offering stingy savings rates to customers. US President Joe Biden has also called out banks for charging excessive fees.
In South Korea, the FSC said it would also allow more online-only banks and ease the loan-to-deposit rules for foreign banks’ local branches.
TECH BOOST: New TSMC wafer fabs in Arizona are to dramatically improve US advanced chip production, a report by market research firm TrendForce said With Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) pouring large funds into Arizona, the US is expected to see an improvement in its status to become the second-largest maker of advanced semiconductors in 2027, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report last week. TrendForce estimates the US would account for a 21 percent share in the global advanced integrated circuit (IC) production market by 2027, sharply up from the current 9 percent, as TSMC is investing US$65 billion to build three wafer fabs in Arizona, the report said. TrendForce defined the advanced chipmaking processes as the 7-nanometer process or more
China’s Huawei Technologies Co (華為) plans to start mass-producing its most advanced artificial intelligence (AI) chip in the first quarter of next year, even as it struggles to make enough chips due to US restrictions, two people familiar with the matter said. The telecoms conglomerate has sent samples of the Ascend 910C — its newest chip, meant to rival those made by US chipmaker Nvidia Corp — to some technology firms and started taking orders, the sources told Reuters. The 910C is being made by top Chinese contract chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯) on its N+2 process, but a lack
Who would not want a social media audience that grows without new content? During the three years she paused production of her short do-it-yourself (DIY) farmer’s lifestyle videos, Chinese vlogger Li Ziqi (李子柒), 34, has seen her YouTube subscribers increase to 20.2 million from about 14 million. While YouTube is banned in China, her fan base there — although not the size of YouTube’s MrBeast, who has 330 million subscribers — is close to 100 million across the country’s social media platforms Douyin (抖音), Sina Weibo (新浪微博) and Xiaohongshu (小紅書). When Li finally released new videos last week — ending what has
OPEN SCIENCE: International collaboration on math and science will persevere even if the incoming Trump administration imposes strict controls, Nvidia’s CEO said Nvidia Corp CEO Jensen Huang (黃仁勳) said on Saturday that global cooperation in technology would continue even if the incoming US administration imposes stricter export controls on advanced computing products. US president-elect Donald Trump, in his first term in office, imposed restrictions on the sale of US technology to China citing national security — a policy continued under US President Joe Biden. The curbs forced Nvidia, the world’s leading maker of chips used for artificial intelligence (AI) applications, to change its product lineup in China. The US chipmaking giant last week reported record-high quarterly revenue on the back of strong AI chip
RSS