Korea Investment & Securities to Become Second Largest Shareholder of KakaoBank... Financial Services Commission Approves Excess Holding

[Asia Economy Reporter Lee Seon-ae] Korea Investment & Securities has acquired all the shares of KakaoBank held by its holding company and affiliates (Korea Investment Value Asset Management), enabling it to become the second largest shareholder.

On the 21st, the Financial Services Commission resolved at its regular meeting to approve Korea Investment & Securities' application for 'exceeding the same person limit on KakaoBank shares.'

Korea Investment & Securities had applied to the FSC for approval to exceed the holding limit in order to acquire the KakaoBank shares held by its parent company Korea Financial Holdings and its wholly owned subsidiary, KIV Asset Management.

The total KakaoBank shares held by the Korea Investment group amount to 27.18%, which is the same ratio as the current largest shareholder Kakao's 27.18%, but they hold one share less.

Korea Financial Holdings, the holding company that owns 100% of Korea Investment & Securities, holds 4%, and KIV Asset Management, a subsidiary wholly owned by Korea Investment & Securities, holds 23.18%.

With this decision by the FSC, Korea Investment & Securities plans to acquire all 27.18% of shares held by its affiliates and subsidiaries. Once the acquisition is complete, Korea Investment & Securities will become the second largest shareholder of KakaoBank.

Under the Internet Banking Special Act, industrial capital can hold up to 34% of internet bank shares. However, to hold more than 10%, 25%, or 33% of internet bank shares, approval from the FSC is required respectively.

Korea Financial Holdings had intended to transfer shares to Korea Investment & Securities before KakaoBank's listing, but Korea Investment & Securities was unable to become a shareholder exceeding the limit due to receiving a fine or higher penalty for violating the Fair Trade Act in 2017. This was because the clause requires shareholders exceeding the limit to have no record of fines related to violations of the Fair Trade Act or financial laws within the past five years.

In March 2017, Korea Investment & Securities was fined 50 million KRW for collusion (violation of the Fair Trade Act) by matching bond trading yields such as national housing bonds.

With this share acquisition, Korea Investment & Securities will significantly increase its scale. In particular, its equity capital is expected to rise from the current separate basis of about 6.3 trillion KRW by approximately 3 trillion KRW to the 9 trillion KRW level.