[interview] K Bank to Go Into 'expansion Mode'

Mobile lender seeks to boost synergy with KT, shareholders

By Park Hyong-ki

K bank may have been operated conservatively since it was launched in April 2017.

'But that's about to change on January 17, 2019,' said Shim Sung-hoon, the chief executive of the country's first internet bank, in an interview at his office in Seoul, Nov.

14.

That is when a revised law governing internet banks goes into effect, allowing K bank to issue 'a lot of new shares' for KT, the country's largest telecom company, to invest in.

KT can acquire K bank shares as much as it can exercise voting rights of up to 34 percent after the telecom giant gains regulatory approval as the bank's major shareholder

Previously, the country allowed nonfinancial companies only to own up to a 10 percent stake in a bank with a 4 percent voting right.

Shim said KT has always expressed its commitment to be K bank's largest shareholder and lead the other 19 strategic and financial investors to boost the mobile bank.

Woori Bank is currently the lead shareholder with nearly 14 percent, followed by KT at 10 percent.

KT Chief Financial Officer Yoon Kyung-keun said in an earnings call Nov.

2 that KT will 'increase its interest in K bank' and is prepared to do whatever it takes to fit the bill as the bank's largest shareholder

'When that time comes and K bank receives a massive capital injection from KT, we are going to expand with KT and our other shareholders,' Shim said.

K bank had no choice but to 'play safe' before because it was required to maintain a double-digital BIS capital adequacy ratio, which currently stands at around 12 percent, he noted.

It couldn't risk expanding its mobile lending service without more capital. This is why K bank had to suspend the service from time to time as its BIS ratio would have fallen, prompting the regulator to flag a warning.

'The revised law is about to breathe life into the bank,' Shim said, noting KT will help it to increase its equity capital to over 1 trillion won ($900 million).

He said KT is 'not chaebol,' justifying the telecom firm as its rightful owner that runs a transparent management system

He also downplayed longstanding concerns on whether KT will misuse K bank as its own piggy bank.

'There are laws banning banks from extending lines of credit to their biggest shareholders. With a high credit rating and financial capacity, KT can get by on its own,' he said.

Shim pointed to KT's big pile of cash and assets. The telecom company has 13.

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