Given K Bank’s ability to reach and maintain profitability, it should be able to go public. However, it cited inadequate investor demand as its reason for putting its IPO on ice – yet again – in a recent regulatory filing. K Bank had been targeting a valuation of 5 trillion won and sought to raise 984 billion won. The valuation was already a significant decrease from the 7 trillion won it was targeting during its initial IPO plans in September 2022.
One challenge for K Bank as it prepares for an IPO is that it has become somewhat dependent on cryptocurrency for growth. It is estimated that K Bank currently has about 5 trillion won (US$3.6 billion), in deposits from South Korean crypto exchange Upbit – so about 20% of overall deposits.
Meanwhile, in early October, South Korean media reported that Upbit is being investigated by the country’s Financial Services Commission (FSC) for potential anti-monopoly breaches. That investigation come as the relationship between Upbit and K Bank is facing scrutiny from South Korean lawmakers.
On Nov. 14, Korea’s Maeil Business newspaper reported that the FSC has identified at least 500,000 to 600,000 potential KYC violations by Upbit. For example, Upbit allegedly allowed users to open accounts using IDs with blurred personal data such as names and registration numbers. The alleged KYC violations could cost Upbit 100 million won per case and may also bring into question its ability to renew its business license.
Reliance on cryptocurrency for growth has always been a risky strategy for K Bank. Regulators and lawmakers in South Korea continue to express skepticism about digital assets, even if they are unlikely to take measures that seriously curtail the market. K Bank may want to consider diversifying away from cryptocurrency. Otherwise, its IPO could be delayed indefinitely.