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Authorities question licensing process for South Korea's 1st internet-only bank

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Authorities question licensing process for South Korea's 1st internet-only bank

South Korea's first internet-only bank, K bank, could face problems with its license after an independent financial reform panel found potential irregularities in its licensing process, Yonhap News Agency reported Oct. 11.

These stem from the finding that Woori Bank, which owns a major 10% stake in K bank, had not met the legally-stipulated capital adequacy ratio benchmark when the country's Financial Services Commission, or FSC, gave preliminary approval for the setting up of K bank. At that time, Woori Bank's quarterly CAR stood at 14%, slightly below the industry average of 14.08% even though it was required to be above the average.

Woori Bank then requested that the FSC consider its average CAR over the past three years instead, rather than on a quarterly basis, Yonhap News Agency reported. The commission accepted this request and declared Woori Bank eligible to hold a major stake in K bank.

Yoon Seok-heon, who heads the independent panel, said there was a "problem in administrative procedure" in approving Woori Bank as a major K bank shareholder, though there was no clear evidence that the FSC broke laws.

K bank received final FSC approval in December 2016 and officially opened for business in April.