In July, K bank raised an additional 400 billion won by issuing new shares. Its three largest shareholders, BC Card, Woori Bank and NH Investment & Securities, provided much of the funding.
However, K bank is reportedly having trouble finding new sources of funding. Investors may have doubts about regulatory approval. Previously, when investors were willing to provide K bank with new funds, South Korea's antitrust agency the Fair Trade Commission (KFTC) nixed the deal. The KFTC objected to Korean telecoms giant KT serving as K bank's majority shareholder, because KT violated antitrust laws. Korean law bars corporate entities from taking a majority stake in a financial firm if they have broken antitrust laws in the previous five years.
According to The Korea Times, K bank is now actively looking for investors outside of Korea. One of the heavyweights the Korean neobank has approached is Temasek. The Singaporean sovereign wealth fund declined to comment on the matter when asked by the newspaper.
Temasek is an investor in some of the world's largest financial services and technology companies, from Visa and ICBC to Tencent and Alibaba, but has yet to invest big in any fintechs. Temasek is a prominent backer of Facebook's Libra. Founding members of the Libra Association reportedly paid US$10 million to join in 2019. Temasek, however, joined earlier this year.
Compared to K bank, Kakao Bank has fared much better. In the second quarter, it posted record earnings of 26.8 billion won ($22.6 million), a nearly ninefold annual increase from 3.0 billion won a year earlier. Kakao's net profit rose more than 400% to 45.3 billion won in the first half of the year.
Crucially, Kakao has managed regulatory challenges more nimbly than K bank. It was able to make Kakao Corp the majority shareholder of Kakao Bank, the first time a non-financial firm in Korea took a majority stake in a bank. As a result, Kakao Bank was able to issue new shares valued at 500 billion won and boost its paid-in capital to 1.8 trillion won.