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.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary