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Tim Alper
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Tim Alper
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The K Bank IPO is set to go ahead later this month, with its CEO dismissing lawmakers’ concerns about its partnership with the crypto exchange Upbit and “bank run” fears.
Per 4th Journal, K Bank CEO Choi Woo-hyung faced journalists’ questions at a press conference on October 15 in Yeouido, Seoul, South Korea.
Choi said a bank run from Upbit customers mass-withdrawing their money from the K Bank platform was “highly unlikely.”
K Bank IPO: Slated for Oct 30
The CEO was speaking in the wake of comments from the lawmaker Lee Kang-il, of the Democratic Party of Korea.
Earlier this month, Lee called on the Financial Services Commission (FSC), South Korea’s top financial regulator, to step in.
The lawmaker remarked that Upbit customers account for some 20% of K Bank’s deposits. He said:
“If Upbit transactions are cut off, it will result in a bank run at K Bank. […] The [relationship] between Upbit and K Bank goes against the principle of the separation of finance and industry. That principle was created to prevent industrial capital from exercising its influence over banks.”
However, when quizzed on the matter, Choi said that K Bank was not using money from Upbit customers to pay out loans.
“Upbit deposits are not being used as a [funding] source for loans. Not at all. Upbit deposits are managed by precisely matching them with highly liquid and stable investment vehicles such as money market funds and government bonds. Even if Upbit deposits [were to stop], I believe [a bank run would be] unlikely to happen because these deposits are matched with liquid funds.”
K Bank CEO Choi Woo-hyung
South Korean law requires all KRW-trading crypto exchanges to partner with domestic banks, which must provide real name-verified fiat on/off ramps.
Upbit’s partnership with K Bank has been a massive hit. During the coronavirus pandemic, Upbit and K Bank were the only bank-exchange duo to offer customers the ability to open bank accounts and wallets without having to visit a branch in person.
This allowed Upbit to steal a march over its rivals, eventually cornering over 80% of the domestic market.
Its rivals have managed to claw back some of this dominance in recent months. But this has not stopped Lee and others from voicing their concerns that Upbit is becoming a “monopoly.”
K Bank was also able to use Upbit’s popularity to attract scores of younger customers.
‘Our Relationship With Upbit Remains Good’ – K Bank CEO
The neobank is now due to finalize its public offering bid on October 18 after it wraps up demand forecasting on Wednesday.
The firm has set a listing date of October 30, as it floats 82 million shares. The bank is aiming for a share price of between KRW 9,500 and KRW 12,000 won ($6.99-$8.83).
At the upper limit, this could see the Upbit partner reach a public offering total of around $723.7 million.
“The proportion of total Upbit deposits has decreased on our platform. And increased interest rates [on fiat deposits] are being well compensated for by our other business interests. We are also strengthening other business partnerships with Upbit.”
Choi
Partnership Expansion
Reporters also asked Choi to comment on the future of Upbit-related business after the K Bank IPO.
They noted that K Bank’s contract with Upbit is set to expire in October next year. To this, Choi replied:
“K Bank, [the card provider] BC Card, and Upbit have formed a partnership to develop new products and services that will connect BC Card payment services, K Bank banking services, and Upbit’s [crypto] services. We believe that this good partnership will continue in the future.”
