Virtual Currency Decline and Upcoming IPO Subscription... Banks Race to Secure Standby Funds (Comprehensive)

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

[Asia Economy Reporter Song Seung-seop] Banks are launching new products and services targeting abundant idle funds. As the cryptocurrency investment craze cools down and funds return, along with the upcoming large-scale public offering subscription, this is interpreted as a strategy to secure customers and funds in advance.

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, from then on, the basic interest rate varies between 0.1% and 0.7% points depending on transaction performance. The more money deposited and the longer it stays in the account, the more advantageous it is. An SC First Bank official explained, "It is a product specialized in managing surplus funds," adding, "Even while trading various products in a highly volatile market, you 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. Previously, customers had to open accounts one by one because the lead securities firms differed for each public offering subscription. Until the 15th of next month, when the main public offering subscriptions conclude, customers who open three or more securities accounts via the Shinhan Bank application (app) will also receive coffee coupons.

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 transaction performance conditions. Transfer and withdrawal fees are also free.

The background for banks continuously launching new products and services is analyzed to be the upcoming public offering super week. KakaoBank, considered a major player in the IPO market, plans to conduct public offering subscriptions on the 26th and 27th of this month. Krafton and KakaoPay will hold general public offering subscriptions on the 2nd-3rd and 4th-5th of next month, respectively. KakaoBank and KakaoPay subscriptions cannot overlap, but Krafton’s can.

For banks, which find it difficult to estimate how much money will be withdrawn through subscriptions, securing as many customers as possible is essential. There is also the advantage that refund money can be absorbed as deposits after the subscription ends. In April, SK Innovation Technology (SKIET) subscriptions 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, there is a possibility that even more money will flow into the three companies, whose sizes approach 12 to 24 trillion KRW.

Surging Liquidity... 20 Trillion KRW in Idle Funds at Major Banks

Already, a kind of ‘idle funds’ is 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. Demand deposits refer to monetary deposits that depositors can withdraw at any time they wish. These include ordinary deposits, current accounts, and household current accounts.

Compared to the beginning of this year, demand deposits have increased by 65.48 trillion KRW (11.3%). Typically, in the financial sector, May and June do not have seasonal factors that would significantly increase deposits. In May alone, demand deposit balances decreased by 4.6344 trillion KRW compared to the previous month. This is why it is analyzed that a considerable amount of funds is waiting for public offerings due to the lack of major investment destinations.

Investor deposits have also steadily maintained the 60 trillion KRW range. Investor deposits refer to money entrusted by investors to securities firms for trading financial investment products. This is either funds to buy stocks or idle funds not withdrawn after sales. According to the Korea Financial Investment Association, investor deposits at the end of last month were 66.1328 trillion KRW, slightly up from 64.0737 trillion KRW the previous month.

Some view that as the cryptocurrency market becomes unstable, investment funds have returned to commercial banks. The domestic price of Bitcoin, the leading cryptocurrency, reached a record high of 81 million KRW in April but then plunged sharply. It has shrunk by nearly half, currently ranging between 33 million KRW and 40 million KRW.

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