KT Struggles as Major Shareholder Shackles Remain Unbroken... Deep in Dilemma

KT Group's Indirect Capital Increase Faces 'One Mountain After Another'
Passage of the Internet Banking Act Is the Most Urgent Alternative
Strong Push for Re-discussion in the National Assembly Right After the General Election
Financial Innovation Driven by ICT...Major Shareholder Restrictions Must Be Lifted

[Asia Economy Reporter Koo Chae-eun] With the Special Act on Internet-Only Banks (Inbank Act) being rejected in the National Assembly plenary session, KT under the leadership of Koo Hyun-mo faces a critical test for its 탈 (?) telecommunications strategy.

Although the possibility of a backdoor capital increase through KT affiliates has also emerged, the procedures are complicated, and since the Inbank Act was a long-cherished project of KT, the prevailing sentiment is stronger that "it’s not over until it’s over." KT plans to maximize its coordination capabilities in the National Assembly and make every effort to pass the bill immediately after the general election.

Focus on Passing the Bill Rather Than Backdoor Capital Increase

On the 9th, a KT official said, "There are criticisms that the bill was rejected due to many abstentions, so we are keeping open the possibility of passing it in the next National Assembly," adding, "We are devising solutions for normalizing K-Bank under various scenarios."

In fact, Lee In-young, floor leader of the Democratic Party of Korea, stated right after the plenary session on the 6th, "Once this extraordinary session ends, a new session may begin, and we will find ways to pass the Inbank Act as originally intended." There are also criticisms within the ruling party that there was insufficient consensus on the purpose and validity of the Inbank Act, which opens the way for ICT companies to enter the banking industry. The Inbank Act was rejected with 75 votes in favor, 82 against, and 27 abstentions out of 184 members present. If the abstentions, who have no clear stance on ICT companies entering banking, can be swayed to support, there is a chance of success in the National Assembly session scheduled for April.

Within KT, many new industries have been pursued under the assumption of becoming the 'major shareholder' of K-Bank, which was launched in 2017, making it difficult to devise scenarios such as bringing in new shareholders or selling shares. A backdoor capital increase through strong affiliates like KT Estate is also uncertain in terms of passing the Financial Services Commission’s major shareholder suitability review.

[Image source=Yonhap News]

Concerns Over Mid- to Long-Term Business Continuity... KT in Deep Thought

Continuity of overseas business is also an issue. KT and K-Bank agreed last year to export their own internet-only bank model to Mongolia. This project combined KT’s telecommunications technology with K-Bank’s non-face-to-face financial technology to export a joint venture model to Mongolia. Unlike other financial companies, this was part of the ICT New Southern Policy, differentiating financial competitiveness through ICT.

If the law passes and KT raises its stake in K-Bank (currently 10%) to 34%, combined with its existing stake in BC Card (69.54%), its position as a financial ICT operator will be solidified. For this reason, KT had already begun preparing mid- to long-term business plans based on the passage of the Inbank Act.

Meanwhile, K-Bank currently has major shareholders including Woori Bank (13.79%), KT (10%), NH Investment & Securities (10%), and IMM Private Equity (9.99%). The Democratic Party of Korea has announced plans to hold a plenary session after the general election to ensure the Inbank Act is passed.

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