BC Card to Become Savior for K Bank... Decides to Acquire 34% Stake Instead of KT

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[Asia Economy Reporter Kim Hyo-jin] BC Card has decided to acquire shares of K-Bank, an internet-only bank facing financial difficulties, and participate in its paid-in capital increase. This move positions BC Card as a savior on behalf of its parent company, KT, which holds a 69.54% stake in BC Card.

According to financial sources on the 15th, BC Card held a board meeting the previous day and agreed to purchase a 10% stake in K-Bank from KT for 36.3 billion KRW and to participate in K-Bank's paid-in capital increase. The scheduled date for acquiring the shares is the 17th. Upon acquisition, BC Card will become the second-largest shareholder of K-Bank.

The largest shareholder of K-Bank is Woori Bank, holding 13.79% of the shares. Alongside Woori Bank, KT (10%), NH Investment & Securities (10%), K-Rose LLC (9.99%), Hanwha Life (7.32%), GS Retail (7.2%), KG Inicis (5.92%), and Danal (5.92%) are also shareholders.

BC Card plans to participate in K-Bank's paid-in capital increase in June, aiming to secure up to a 34% stake, including the purchase of existing shares from KT. K-Bank is conducting a paid-in capital increase worth 594.9 billion KRW through a rights offering to existing shareholders.

If existing shareholders do not participate in the paid-in capital increase, resulting in forfeited shares, BC Card intends to purchase these shares to increase its stake up to the 34% limit set by the "Special Act on the Establishment and Operation of Internet-Only Banks (Internet Bank Special Act)."

The amount for acquiring shares through the paid-in capital increase is 262.5 billion KRW. Consequently, BC Card will invest a total of 298.8 billion KRW to become the largest shareholder of K-Bank.

K-Bank had hoped to overcome its financial difficulties by receiving capital injection once KT became the major shareholder.

In March last year, KT applied to financial authorities for a major shareholder suitability 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 alleged collusion under the Fair Trade Act, raising the possibility of violating related provisions, leading financial authorities to indefinitely suspend the suitability review.

Current law allows non-financial major shareholders focused on information and communication technology (ICT) industrial capital to increase their stake in internet-only banks beyond the existing 4% limit up to 34%. However, they must not have received criminal penalties of fines or higher within the past five years for violations of financial laws, the Fair Trade Act, the Tax Offenses Punishment Act, or the Act on the Aggravated Punishment of Specific Economic Crimes.

The amendment to the Internet Bank Special Act, which attracted attention for removing the requirement of no prior Fair Trade Act violations (fines or higher) from the approval conditions for major shareholders exceeding the stake limit, thereby potentially allowing KT to become the major shareholder of K-Bank, was rejected at the National Assembly plenary session last month.

Accordingly, K-Bank and KT have been pursuing a 'Plan B,' a detour for capital expansion. At last month's regular shareholders' meeting, K-Bank appointed Lee Moon-hwan as its CEO. Lee joined KT in 1989 and has held positions such as Head of New Business Development, Head of Corporate Planning, and Head of Corporate Business Division, and previously served as CEO of BC Card.

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