|K bank CEO Lee Mun-hwan speaks during a press conference at the Korea Federation of Banks headquarters in Seoul on Aug. 4. Courtesy of K bank|
By Lee Min-hyung
There has been growing attention over whether K bank will attract money from the Singaporean government-owned investment firm Temasek amid a dull response from local institutional investors over its scheduled capital expansion plan.
Temasek has expressed interest in investing in internet banks here and abroad; while K bank is desperate to find investors to inject additional capital to normalize its operations. Temasek Holdings is one of the largest investment firms based in the city-state.
"We are preparing for a recapitalization slated for next year are contacting investment firms abroad," a K bank official said.
"Temasek was just one of the investors that contacted us earlier this year, but we did not have advanced talks," the official added. "We just introduced our business model to the company without a detailed discussion on our valuation."
The official said the company remains open to all the possibilities for its second recapitalization and would keep in contact with investment firms here and abroad, including Temasek.
"As a matter of policy, Temasek doesn't comment on market speculation and rumors," the Singaporean firm said.
K bank has held a series of meetings with local institutional investors. "K bank was hoping to win an investment from Temasek, and it knows why such a Temasek investment matters a lot," a senior banking source told The Korea Times asking not to be named.
Despite its global reputation, Temasek is relatively lesser-known in the Korean market, but rumors have circulated that it may join K bank's drive for capital expansion next year. K bank is Korea's first internet-only bank.
Given Temasek's interest in the next banking paradigm shift, the scenario sounds quite feasible. The investment firm also recently jointed Facebook's digital currency project Libra as one of its biggest supporters.
K bank is known to have recently issued a request to a group of investment banks here and abroad, in a move to find new investors for its capital expansion plan. Local industry officials did not rule out the possibility of Temasek's participation in the recapitalization.
For the past few years, a group of foreign investment firms have expressed the intention to invest in K bank, but no meaningful deals have been secured due to legal risks that K bank faced surrounding its former major shareholder, KT.
"But such a risk factor has been cleared away after K bank recently resumed its business," another banking industry source said. "But it remains to be seen whether the company will be able to finalize an investment deal with overseas institutional investors, as it has been only a few months since the firm restarted operations."
K bank is in dire need of capital to expand its size and compete with its rival Kakao Bank which retains the top spot in the local internet-only bank industry.
In July, K bank expanded its capital by 400 billion won by issuing new shares, with its three major shareholders ― BC Card, Woori Bank and NH Investment & Securities ― pumping in capital for the lender.
For now, K bank's total capital amounts to around 900 billion won, which is about a half of Kakao Bank's 1.8 trillion won.
K bank has been keeping in touch with Temasek and a group of other institutional investors here and abroad for additional recapitalization and to secure as much as 400 billion won in capital.
K bank resumed business in July this year after suffering years-long capital erosion. The company was the nation's first internet-only lender, launching its business in 2017, but soon began to fall behind the Kakao subsidiary.
For now, K bank is focused on expanding its size and raising more capital to carry out more aggressive sales activities and regain its status as a leading mobile-driven lender here.
K bank CEO Lee Mun-hwan said in a recent press conference that the company may achieve a turnaround as early as 2023.
"Even when we were in a state of capital erosion, overseas investment firms expressed their intention to invest in us," Lee said. "We are still conducting an internal review over how much capital we are going to raise next year."