NH Investment and Securities Co. secured a stake in K Bank, rekindling its plan to enter the Internet banking sector.
Hyundai Securities plans to sell its stake in K Bank, one of Korea’s first Internet-only banks, the firm said on June 23.
NH I&S said it was named as the priority bidder for a 10 percent stake in K Bank, an Internet bank, owned by Hyundai Securities. If everything goes as planned, the two sides will be able to complete the deal this summer by signing the SPA. Industry sources speculate NH I&S would pay around 27 billion won to 28 billion won to take over the stake in the internet bank from the securities firm, including expenses for manpower and other expenses for the securities firm.
NH I&S participated in a consortium for an Internet bank being pushed by Interpark, but the projected Internet bank failed to get the official approval from the financial authorities.
With this reason, NH I&S has been linked with the sale of the Hyundai Securities stake in K Bank ever since the plan was announced as one of the most likely bidders.
NH I&S plans to enter the Internet bank operation to expand its customers, projecting that an Internet bank has the potential to grow as large as the biggest bank now in operation. The internet bank’s customers would include many investors in the securities market, which is the biggest reason for NH I&S moves to acquire a stake in K Bank.
The acquisition will pave the way for its participation in Internet banking, including the provision of loans to the Internet Bank which might need a lot of funds to kick off its operation and put it into normal stages of operation.
Hyundai Securities will seek board approval for the transaction at a meeting on June 28. “We gained the consent from K Bank’s other shareholders regarding the share sell-off,” a Hyundai Securities official said. “We will begin the disposal procedure in earnest after the board’s approval.
The move comes as KB Financial Group’s acquisition of Hyundai Securities in April will cause a conflict of interest, since its key subsidiary KB Kookmin Bank is a major shareholder of Kakao Bank, another Internet bank picked for a government-led pilot program.
Kakao Bank and K Bank will offer financial services from deposits, lending and credit cards to foreign exchange transactions through their online platforms only — the first of their kind in Korea’s 23 years of financial history. The price for the shares in K Bank is expected to be around 25 billion won ($21.7 million) on par with the amount of investment by Hyundai Securities.
Several brokerage firms, including NH Investment Securities, are said to be keen on buying the shares in the mobile-only bank.
The Kakao-led consortium plans to launch the Korea Kakao Bank with initial funds of 300 billion won ($260 million). The largest shareholder, Korea Investment Holdings, has a 50 percent stake. Kakao and KB Kookmin Bank hold 10 percent each.
The Internet bank will engage in the same business as commercial banks, including processing deposits, loans and wiring money. Consumers will no longer need to visit brick-and-mortar bank branches to open new bank accounts or get loans.
The two consortiums are scheduled to deliver public presentations on their business plans today at the Korea Federation of Banks headquarters in central Seoul.
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A view of the buildings where NH I&S, left, and K Bank,right, have offices in Seoul.
