South Korea Approves Alibaba Affiliate-Backed Internet Bank
(Beijing) — A group that includes Alibaba's Ant Financial Services Group affiliate has won permission to open South Korea's first online bank, marking an important overseas move into a market that hadn't approved a new lender in 24 years.
The new K-Bank, which will provide services without brick-and-mortar branches, will begin operating in January or February, South Korea's banking regulator, the Financial Services Commission, said in a statement on Wednesday.
Ant Financial, whose main asset is the Alipay electronic payments service, is among about 20 shareholders that will back K-Bank. The consortium is led by leading local telephone company KT Corp., and also includes local partners Woori Bank and Hanwha Life Insurance.
A second online lender, Kakao Bank, has obtained preliminary approval to open a similar bank in South Korea, and is preparing for a final review. The group behind that bank is led by Kakao Corp., operator of South Korea's leading messaging app, and includes Chinese internet giant Tencent Holdings Ltd.
South Korea had last issued new banking licenses in 1992. The country started to ease restrictions on the sector last year with a goal of facilitating convenience, bringing in competition and innovation, and expanding globally.
Alibaba Group Holding Ltd. and Tencent are China's largest internet companies, and have become two of the most aggressive as Beijing opens up the financial services sector to private investment. Alipay was originally part of Alibaba, but was later spun off as Ant Financial's primary asset due to restrictions on foreign ownership.
China's financial services sector was traditionally dominated by big state-run banks, and only a handful of the largest players ever ventured overseas. A new generation of private firms has been far more aggressive and quickly expanded at home.
Ant is one of the few to venture abroad so far, moving into markets where it mostly targets Chinese travelers. It currently has about 400 million users, and is eying an IPO in Hong Kong or the Chinese mainland as soon as next year.
Most of Tencent's payment services are still confined to China, and are connected to its popular QQ and WeChat social networking platforms.
Contact reporter Coco Feng (firstname.lastname@example.org)
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