20 Enterprises Plan to Found a New Bank

About 20 domestic enterprises such as SK, Lotte, and Kolon, are planning to establish a bank in cooperation with European financial institutions. It would be the first establishment of banks since Pyonghwa Bank was founded in 1992 and the joint establishment of a bank will be a first challenge ever in its history.

According to the source of financial industry and related businesses, the companies are already operating `V Bank Consulting` which is a kind of organizing office for the bank foundation. The companies that decided to invest in the foundation of the new bank list SK, Lotte, Kolon, Dongwon Securities, Sambo Computer, Kyungbang, Heesung, Daeyu, Daum, Ahn Lab, Inc., Enet, Inisis, Paxnet, Securesoft, Dreamer, Future System, Kose Logistics, Co. Ltd.

Lee Hyung-Seung, chairperson of V Bank Consulting, explained that "20 domestic companies will invest 80-85 percent of the 100 billion won capital and we are currently negotiating with European business to invest 15-20 percent of the capital. As soon as the foreign investors are decided, we will apply for the preliminary approval for the foundation of the bank to the Financial Supervisory Commission in April." Mr. Lee mentioned that "if everything goes as scheduled, the bank will open by the end of this year or early next year. According to the current bank laws, domestic large shareholders can have up to 4 percent only. But if the bank is founded in cooperation with foreign investors, domestic investors are allowed to share the same amount as the foreign investor holds. So, SK and Kolon will invest the same amount of money as the foreign companies."

Mr. Lee also said that "the original plan was to found an Internet Bank but since there was no legal standard for the Internet Bank business ready, we decided to found an ordinary bank for now. But we will specialize our business for on-line operation only without having branches."

Consequently, the new bank will have about 100 employees and executive at maximum and will not operate any branch except for service center.

The bank is also planning to make a strategic cooperation contract with Shinsaege, Compaq Korea, Humax, Dreamwiz, Poongsan, Hyungdae Development Company, and Ilshin Foundation Investment.

Chan-Sun Hong hcs@donga.com