South Korea’s first online-only bank K-Bank is actively seeking to regain ground against the country No. 1 online-only bank Kakao Bank with a wide range of new products after about a year-long suspension of its loan service due to a capital shortage.

K-Bank on Wednesday introduced a new savings account product called Plus Box that offers consumers an annual interest rate of 0.7 percent without any conditions – 0.2 percentage point higher than 0.5 percent offered by industry leader Kakao Bank’s Safe Box. The new product is linked to its new checking account introduced on the same day.

As part of efforts to compete with Kakao Bank that has solidified its leadership as the country’s top internet-only bank, K-Bank has increased savings limit to up to 100 million won ($83,124), which is much higher than Kakao Bank’s 10 million won.

Last week, K-Bank also launched a checking account service that allows consumers to trade bitcoin on UPbit, the country’s largest cryptocurrency exchange. It also plans to resume lending service as early as this month after months-long suspension since June last year due to a capital shortage. K-Bank will also introduce new mortgage-loan products.

K-Bank’s aggressive move to regain ground comes as it is on track of increasing capital for operations. The online bank plans to issue 239.2 billion won in new shares to three major shareholders BC Card, Woori Bank, and NH Investment & Securities by Aug. 28. It also plans to issue 157.4 billion won in convertible stocks to secure total 396.6 billion won in capital.

Woori Bank approved in a board meeting last week K-Bank’s 163.1 billion won worth of new stock issuance while NH Investment & Securities plans to approve a plan to purchase K-Bank’s new shares in a board meeting on Aug. 23. Industry experts expect that the plan should be approved without opposition.

Initially, K-Bank planned to increase capital by placing telecommunications giant KT Corp. as its largest shareholder. The plan, however, was aborted as KT was investigated over allegations of violating the country’s fair trade law. Instead, the online bank is now trying to bring BC Card, a subsidiary of KT, as its largest shareholder to expand capital base.

If K-Bank’s plan is carried out successfully, it is expected to increase its capital to 901.7 billion won in total, which could help it to take on the industry leader Kakao Bank.

Kakao Bank’s total loan amount reached 16.7 trillion won as of end March and deposit 21.3 trillion won.

K-Bank began service in April 2017 as the country’s first internet-only bank, followed by Kakao Bank. In 2019, however, K-Bank began suspending loan business due to capital issues, allowing Kakao Bank to become the front runner.

By Lee Sae-ha and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]