Coins Are Tough, Should We Wait for IPOs... Banks Holding Onto Waiting Funds

Kakao Bank, Cafe, and Cratphone Announce Consecutive IPO Subscription
Demand Deposits at Commercial Banks Reach 641 Trillion Won... Up 20 Trillion in One Month
Impact of Funds Returning from Plummeted Cryptocurrency Market

Banks have recently been launching new products and services one after another to capture the rapidly increasing idle funds. This is interpreted as a strategy targeting the abundant market liquidity amid the cooling cryptocurrency investment craze and the upcoming large-scale public offering subscription period.

According to the financial sector on the 8th, SC First Bank recently introduced the ‘SC First My Signature Account,’ a free deposit and withdrawal account. Although only a 0.01% interest rate is applied for the first month after depositing money, the basic interest rate is differentiated by 0.1 to 0.7 percentage points depending on transaction performance thereafter. The more money deposited and the longer it is kept in the account, the more advantageous it is. A representative from SC First Bank explained, "It is a product specialized in managing surplus funds," adding, "Even while trading various products in a highly volatile market, customers can receive a stable interest rate."

Shinhan Bank started the financial sector’s first ‘Non-face-to-face Bulk Securities Account Opening Service’ this month. Using this service, customers can open nine securities accounts simultaneously with a single registration. This business was launched as the number of customers wanting to create securities accounts increased with the approaching public offering subscription schedule. If customers open three or more securities accounts through the Shinhan Bank application by the 15th of next month, when the major public offering subscriptions conclude, they will also receive a coffee coupon.

BNK Busan Bank launched ‘Ma!i Account’ targeting the MZ generation (Millennials + Generation Z), who have a high investment enthusiasm. This product is available only to individuals aged 18 to 29. It offers an annual interest rate of 1.5% on an average balance of up to 1 million KRW without any transaction performance conditions.

Surging Liquidity... Idle Funds at Major Commercial Banks Soar by 20 Trillion KRW

Analysts suggest that the upcoming public offering super week is behind banks’ successive launches of new products and services. KakaoBank, considered a major player in the IPO market, plans to conduct its public offering subscription on the 26th and 27th of this month. Krafton and KakaoPay will hold their general public offering subscriptions on the 2nd-3rd and 4th-5th of next month, respectively.

For banks, which find it difficult to estimate how much money will be withdrawn through subscriptions, securing as many customers as possible is crucial. There is also the advantage that refund money after the subscription can be absorbed directly into deposits. The SK Innovation Technology (SKIET) subscription in April attracted a record-high deposit of 80.9017 trillion KRW. Considering SKIET’s market capitalization was about 7 trillion KRW at the time of the offering, it is possible that even more money will flow into the three companies, whose sizes approach 12 to 24 trillion KRW.

Idle funds have already been increasing at major banks. Last month, demand deposits at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?reached 641.5351 trillion KRW. This is a significant increase of 19.6905 trillion KRW from 621.8446 trillion KRW a month earlier. Compared to the beginning of the year, it has grown by 65.48 trillion KRW (11.3%). Typically, there are no seasonal factors in May and June that would cause a sharp increase in deposits. In fact, the balance of demand deposits decreased by 4.6344 trillion KRW in May compared to the previous month.

Some view that investment funds that had entered the cryptocurrency market have returned to commercial banks due to various adverse factors. The domestic price of Bitcoin, the leading cryptocurrency, hit a record high of 81 million KRW in April but then plunged sharply. It has now shrunk by nearly half, fluctuating between 33 million KRW and 40 million KRW.

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