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.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
RSS