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.
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) share of the global foundry market rose to almost 70 percent last year amid booming demand for artificial intelligence (AI), market information advisory firm TrendForce Corp (集邦科技) said on Thursday. The contract chipmaker posted US$122.54 billion in revenue, up 36.1 percent from a year earlier, accounting for 69.9 percent of the global market, TrendForce said. Its share was up from 64.4 percent in 2024, it said. TSMC’s closest rival, Samsung Electronics, was a distant second, posting US$12.63 billion in sales, down 3.9 percent from a year earlier, for a 7.2 percent share of the global market. In the
At a massive shipyard in North Vancouver, Canadian workers grind metal beams for a powerful new icebreaker crucial to cementing the country’s presence in the increasingly contested arctic. Icebreakers are specialized, expensive vessels able to navigate in the frozen far north. And “this is the crown jewel,” said Eddie Schehr, vice president of production at the Seaspan shipyard. For Canadian Prime Minister Mark Carney, who heads to Norway next Friday to observe arctic defense drills involving troops from 14 NATO states, Canada’s extreme north has emerged as a strategic priority. “Canada is and forever will be an Arctic nation,” he said ahead of
Chinese entrepreneur Frank Gao used to spend long hours running his social media accounts but now outsources the chore to artificial intelligence (AI) agent tool OpenClaw, which is taking China by storm despite official warnings over cybersecurity. OpenClaw, created in November by an Austrian coder, differs from bots such as ChatGPT because it can execute real-life tasks such as sending e-mails, organizing files or even booking flight tickets. “Since January, I’ve spent hours on the lobster every day,” Gao said in an interview, referring to OpenClaw’s red crustacean mascot. “We’re family.” After downloading OpenClaw, users connect it to artificial intelligence models of their
RSS