National Policy Committee Allows Industrial Capitals to Have up to 34% of Shares of Internet-Only Banks

Sep 20, 2018

National Policy Committee (NPC) has eased separation of banking and commerce act that will allow industrial capital to have up to 34% of internet-only banks’ shares.
NPC has opened doors to promoting convergence of finance and ICT by removing stock holding limit of companies with limited mutual investment while allowing high ICT assets of corporate groups.
NPC has decided to bring in an alternative internet-only bank exemption law, which is based on such information, on the 19th and decided on it at a general meeting. 2 cases of The Banking Act’s Partial Revision Legislative Bill and 4 cases of Internet-Only Bank Proposal that were brought into current standing committee will be referred to judiciary committee and The National Assembly’s main meeting.
This proposal raises maximum of shares that industrial capital can have of internet-only banks from 4% to 34%. However, it excludes companies with limited mutual investment that have individual heads through enforcement ordinance. It also has information that allows companies that have more than 50% of its assets related to ICT to have 34% of shares.
NPC also decided on standards for credit offering. It regulates internet-only banks from credit offering that exceeds 15% of its capital to identical individual or corporate and 20% to identical borrower.
NPC’s proposal prohibits internet-only banks from doing credit offering to their biggest shareholders. It is also impossible for them to obtain equity securities issued by their biggest shareholders. Also, they cannot provide loans to companies excluding small and medium companies.
“We have made words of enforcement ordinance that prevents conglomerates from entering even clearer to eliminate any possibility of controversy.” said Yoo Dong-soo who is a member of Democratic Party of Korea and an assistant administrator of NPC.
It is expected that this bill, which has agreement between the opposing parties and mediation within the ruling party, will be brought into a main meeting on the 20th after going through judiciary committee.
However, conflicts between the opposing parties will be inevitable as matters that can be issues during legislation process are passed through enforcement ordinance.
“Fact that The National Assembly has decided to entrust Financial Services Committee with this decision indicates that it is only focused on current issues and ignores its side-effects.” said Solidarity for Economic Reform. “It will be impossible for The National Assembly to dodge criticism of abandoning its responsibilities as the legislator.”
Staff Reporter Ryu, Geunil | ryuryu@etnews.com & Staff Reporter An, Younggook | ang@etnews.com

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