Hana Bank and Samsung Card Face Sudden Halt in MyData Business

Gyeongnam Eoneu, Hana Financial Investment, and 6 Others
Major Shareholders Face Criminal Lawsuits and Sanction Procedures
Financial Authorities Decide to Suspend Business Review
Must Obtain Approval Before February Next Year

[Asia Economy reporters Kangwook Cho and Hayoung Ki] The MyData business initiatives led by Hana Bank and Samsung Card have been put on hold. The financial authorities decided to suspend the business review process due to ongoing criminal lawsuits and disciplinary procedures involving the major shareholders. This has created an urgent situation for financial companies, which are now inevitably falling behind in the MyData business scheduled to launch in February next year.

According to financial circles on the 19th, the Financial Services Commission (FSC) held a regular meeting the previous afternoon and decided to suspend the MyData license reviews for six companies: Gyeongnam Bank, Samsung Card, Hana Financial Investment, Hana Bank, Hana Card, and Fink.

In particular, Hana Financial Group’s review was suspended not only for Hana Bank, Hana Card, and Hana Financial Investment but also for Fink, a joint venture established with SK Telecom. The criminal lawsuit against the major shareholder, Hana Financial Group, which has been ongoing for three years, became a stumbling block. In June 2017, the People's Solidarity for Participatory Democracy and the Financial Justice Solidarity reported to the prosecution that Hana Financial Group and its management violated the Banking Act by giving preferential personnel treatment to an employee who allegedly provided a special loan to Jung Yura, the daughter of Choi Soon-sil, through Hana Bank.

Regarding Samsung Card, consideration was given to the Financial Supervisory Service’s (FSS) impending disciplinary decision against its major shareholder, Samsung Life Insurance. The FSS has issued a preliminary notice warning of a severe disciplinary action of 'institutional warning' against Samsung Life Insurance due to the non-payment of cancer hospitalization insurance claims at nursing hospitals. The FSS plans to hold a disciplinary committee meeting on the 26th to determine the level of sanctions against Samsung Life Insurance.

The FSC explained, "Since it was confirmed that criminal lawsuits and disciplinary procedures are ongoing against the applicants’ major shareholders, the period until these procedures are completed will be excluded from the review period (60 days)."

As a result of this decision, these six companies will face setbacks in the MyData business. The MyData business allows customers, with their consent, to integrate and manage personal information scattered across various financial companies on a single platform. It is also regarded as a "golden goose" because it can be linked to new business models in sectors such as healthcare and distribution in the future. Since the 10th of last month, the financial authorities have been conducting on-site inspections of 35 companies that applied for the first round of preliminary MyData licenses.

The timing is problematic. Since the MyData business will switch to a licensing system starting February next year, if the six companies whose reviews were suspended do not obtain licenses before then, all currently operating services will become illegal, an unprecedented situation. For these six companies already providing similar services, the worst-case scenario could be a forced service suspension. In particular, Hana Financial Group may fall behind other financial groups in the MyData business competition.

Hana Financial Group stated, "We respect the decision made by the government authorities in accordance with relevant laws and regulations, and regarding this decision, we plan to consider various participation options in line with future market conditions. We will do our best to obtain licenses again in the future."

Another issue is that it will take a considerable amount of time before the reviews for the six financial companies can resume. The prosecution has not even assigned the case related to the Hana Financial Group indictment filed by the People's Solidarity for Participatory Democracy. The review can only resume after the major shareholder-related lawsuits are concluded before February, but realistically, meeting this schedule is impossible.

In the case of Samsung Card, if Samsung Life Insurance receives a disciplinary sanction of institutional warning or higher at the FSS disciplinary committee, it will be barred from entering new business areas requiring financial authorities’ approval for one year. Samsung Card stated that since the disciplinary committee for Samsung Life Insurance has not yet been held and no results have been announced, they will monitor the situation. However, they believe that the review suspension is only due to the uncertainty of the disciplinary committee’s outcome and that there will be no significant disruption to the schedule.

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