K-Bank in Crisis... Internet Bank Act Amendment Bill Rejected

[Asia Economy Reporter Kim Hyo-jin] The amendment to the Special Act on Internet-Only Banks, which had attracted attention for enabling KT's participation as a major shareholder and opening the way for K-Bank's revival, ultimately failed to pass the National Assembly. Given the remaining schedule of the National Assembly, the amendment is likely to be discarded.

On the 5th, the National Assembly held a plenary session and rejected the amendment with 75 votes in favor, 82 against, and 27 abstentions out of 184 members present.

K-Bank, Korea's first internet-only bank, planned to overcome its financial difficulties by changing KT to a major shareholder and receiving a capital injection of 590 billion won, thereby expanding its capital to the 1 trillion won level. K-Bank is currently drifting as it cannot conduct new loan operations due to financial problems.

The current law allows non-financial major shareholders (industrial capital) focused on information and communication technology (ICT) to increase their stake in internet banks from the existing limit of 4% up to 34%. However, they must not have been criminally punished with a fine or higher for violations of financial-related laws, the Fair Trade Act, the Tax Offenses Punishment Act, or the Act on the Aggravated Punishment of Specific Economic Crimes within the past five years.

In March last year, KT applied to the financial authorities for a major shareholder eligibility review to increase its stake in K-Bank to 34%, but the application was rejected. This was because KT became subject to a prosecution investigation for collusion under the Fair Trade Act, raising the possibility of violating the relevant clause, leading the financial authorities to indefinitely suspend the eligibility review.

The core of the amendment was to delete the clause regarding prior violations of the Fair Trade Act (fine or higher) from the approval requirements for major shareholders holding shares exceeding the limit in internet banks.

This content was produced with the assistance of AI translation services.