Revised rules bolster Korean banks' competition, but no silver bullet to thriving

Authorities are making it easier for banks to own and buy companies overseas.

South Korea’s recent moves to ease ownership of financial institutions will drive competitiveness amongst regional banks, but don’t expect a big shake-up in the market share, analysts told Asian Banking & Finance.

In July, the country’s Financial Services Commission (FSC) floated plans to ease rules in foreign ownership and even ownership of non-finance entities. Examples listed by the FSC include a local insurance company being allowed to own a foreign bank operating in an overseas market; or a credit finance business being able to acquire a rental car business in an overseas market.

The FSC has also proposed easing rules on the maximum level of credit that a local financial company can extend to its foreign subsidiary for a certain period of time.

Notably, domestic regional banks may now apply to expand into nationwide commercial banks, provided they meet requirements such as having sufficient financial resources.

Boosting competition