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.

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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