Shinhan Financial Group has decided not to participate in a consortium led by Viva Republica (CEO Lee Seung-geun) for an internet-only bank. While the consortium led by Viva Republica has taken a huge blow, industries are interested on why Shinhan Financial Group has decided not to participate.
Some say that it was already predictable that Shinhan Financial Group and Viva Republica would eventually break apart.
According to industries, it was confirmed that Viva Republica initially asked Hana Financial Group instead of Shinhan Financial Group to be part of the consortium for South Korea’s third internet-only bank.
“Although we highly rate business models by Viva Republica, we ultimately rejected its offer due to many problems.” said a representative for Hana Financial Group.
It seems that Shinhan Financial Group also could not accept negative factors that Hana Financial Group saw.
Although Shinhan Financial Group, which wanted innovative channels such as internet-only bank, decided to participate in the consortium due to Viva Republica’s innovativeness, it ultimately decided to pull out of the consortium because it believed that there would be more losses than gains.
Ultimately, alliance between Shinhan and Viva Republica broke apart even before they were able to apply for an approval.
Although different opinions towards a business model are reasons on the surface, conflict between Shinhan and Viva Republica regarding leadership of internet-only bank was the reason why they ultimately broke apart.
Viva Republica wanted its internet-only bank to be startup culture and business model-based challenger bank. On the other hand, Shinhan Financial Group wanted its internet-only bank to be open banking-based internet-only bank that emphasized acceptability so that anyone can easily use its internet-only bank.
Different markets have been predicting that a conflict between Shinhan Financial Group and Viva Republica has been brewing for a long time.
It was confirmed that Shinhan Financial Group originally chose Naver as its partner and had been talking with Naver behind the scenes. It also set up an internal goal of creating an internet-only bank that surpasses Kakao Bank and K bank by combining network and influence of Naver and its professionalism. However, its plan fell apart when Naver decided not to participate.
“Although there were positive views towards working together, Naver ultimately decided not to participate.” said a representative for Shinhan Bank. “As a result, Shinhan Financial Group started looking for a follow-up partner and it hastily started having talks with Viva Republica.”
Shinhan Financial Group and Viva Republica were deeply divided on funding issue as well.
“We felt that Viva Republica saw us as just a source of fund and we were not happy with the fact that Viva Republica, which is not too familiar with finance, was trying to lead the consortium.” said a high-ranking official of Shinhan Financial Group.
Shinhan Financial Group basically decided to call off the plan for an internet-only bank through its announcement on the 21st. As Shinhan Financial Group backed out of the consortium, it is inevitable that ‘Toss Bank’ consortium led by Viva Republica will take a blow as a result.
Hyundai Marine & Fire Insurance and Zigbang also decided not to participate in ‘Toss Bank’ consortium.
“We notified Toss about our intention.” said a representative for Hyundai Marine & Fire Insurance. “We expected an universal and acceptable internet-only bank that is centered on a bank and because Shinhan Financial Group decided not to participate, we have also decided not to participate in the consortium.”
Besides Hyundai Marine & Fire Insurance and Zigbang, other startup companies that were thinking about participating in ‘Toss Bank’ consortium either decided not to participate in the consortium or rethink about participating in the consortium. As a result, there is a higher chance that ‘Toss Bank’ consortium will fall apart.
Viva Republica has to think about how to constitute a group of shareholders as it looks to apply for preliminary approval on the 26th. Although it is the major shareholder with 34% of shares, it needs to find a business that can replace Shinhan Financial Group that was supposed to be second major shareholder with maximum of 20% of shares.
As this situation unfolds, financial authorities are in disbelief and disappointed about this situation.
“Due to significant difference in opinions, Shinhan Financial Group has decided not to participate in the consortium.” said Toss Bank consortium. “However, we are going to continue to push forward with other shareholders of Toss Bank consortium.”
Staff Reporter Gil, Jaeshik | osolgil@etnews.com & Staff Reporter Park, Yoonho | yuno@etnews.com