Customers visit a bank branch in Seoul (Yonhap)
SEOUL, Jan. 31 (Korea Bizwire) – South Korea’s financial regulator said Wednesday it will make it easier for regional lenders to become nationwide commercial banks, in a move aimed at promoting competition in the banking sector.
“The government announced on July 5, 2023, that it will seek to promote the transition of local banks to commercial banks as a way of promoting competition in the banking sector,” the Financial Services Commission (FSC) said in a press release.
“The most representative change will be that a local bank’s area of operation will become nationwide once it turns into a commercial bank, promoting competition among banks in its new area of operation,” the FSC said.
Currently, a banking act does not specify whether an existing regional lender is required to file for a fresh review to become a nationwide commercial bank.
Under the proposed plan, any existing regional lender will be able to request for a transition into a nationwide commercial bank as long as they meet the minimum criteria — 100 billion won (US$75.1 million) in capital among others — eliminating the need for them to go through the separate process of closing their existing business while seeking to establish a new business as a commercial bank.
Regional lenders seeking to become a nationwide commercial bank will also be allowed to skip the process of asking for preliminary approval, which is currently required for all new commercial banks.
In addition, banks facing possible indictment of their officials for financial accidents or crimes will be allowed to request for a transition into commercial banks as long as the suspected case does not involve their shareholders.
The FSC said no local bank had yet to ask for a transition into a commercial bank as of Tuesday, but noted a review for such a process may take far less time than one for a fresh business “considering that they (local banks) are already engaged in banking business with necessary personnel, materials and equipment, unlike in the case of a new business.”
(Yonhap)
