Yoon Ho-young, CEO of Kakao Bank... First Test of 'Comprehensive Inspection' After Reappointment

Financial Authorities Announce Comprehensive Inspection of Internet Banks
Industry Leader KakaoBank Selected as Top Priority Target

[Asia Economy Reporter Kiho Sung] Yoon Ho-young, CEO of KakaoBank, who has effectively succeeded in his reappointment (photo), is facing a new challenge. Since the transition to a sole CEO system under Yoon Ho-young last year, KakaoBank has successfully turned a profit and is now being strongly considered as the first internet-only bank to undergo a comprehensive inspection by financial authorities. This year marks the first comprehensive inspection of rapidly growing internet banks.

According to the financial sector on the 9th, the Financial Services Commission and the Financial Supervisory Service recently requested KakaoBank and K Bank to submit their target ratios for mid-interest rate loan products for this year. The industry views this as the financial authorities strengthening management and supervision ahead of the comprehensive inspection.

The Financial Supervisory Service plans to conduct comprehensive inspections this year on six banks and holding companies, three securities firms, four insurance companies, as well as one asset management company, one specialized credit finance company, and one mutual finance company each. Among internet banks, industry leader KakaoBank is ranked first.

The Financial Supervisory Service postponed comprehensive inspections during the first three years after the launch of internet banks. KakaoBank, which opened in 2017, saw its grace period end last year. Established in July 2017, KakaoBank underwent a sector-specific inspection by the Financial Supervisory Service immediately after the grace period ended.

At that time, KakaoBank was evaluated as having passed its first inspection without major difficulties. However, comprehensive inspections are different, so CEO Yoon is expected to face deeper concerns. Unlike sector-specific inspections that check specific issues over one to two weeks, comprehensive inspections involve up to 40 personnel over a total of six weeks, including a two-week preliminary inspection, to thoroughly review the company’s overall situation.

Activation of Mid-Interest Rate Loans Expected to Be a Key Issue

The key issue is the ‘management caution’ notice pointed out during last year’s sector-specific inspection. The Financial Supervisory Service identified six management caution items and three improvement items and instructed corrective actions. In particular, it demanded the establishment of an effective contingency plan for crisis situations and improvements in the timeliness of internal capital-related tasks. KakaoBank has already completed improvements regarding the pointed-out issues. Management caution is an administrative guidance measure that requests financial companies to exercise caution or voluntarily improve.

Along with this, financial authorities are expected to actively promote the activation of mid-interest rate loans through this year’s comprehensive inspection. Earlier, Kwon Dae-young, Director of the Financial Industry Bureau at the Financial Services Commission, stated in the early-year work plan, "We will strengthen management and supervision so that internet-only banks can innovatively expand loans to low- and medium-credit borrowers in accordance with the law and the purpose of introduction," and added, "We will regularly check and improve plans and status of loans to low- and medium-credit borrowers."

An industry insider said, "Last year, KakaoBank received a management caution notice, an administrative guidance measure requesting voluntary improvement, immediately after the sector-specific inspection," and added, "Since CEO Yoon and KakaoBank have been steadily preparing for the comprehensive inspection, we believe there will be no major issues."

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