South Korea finally opens up its banking sector

Seoul has announced the biggest reforms to Korea’s banking sector in more than 30 years, in a bid to boost competition.

What’s it all involve?

• 🏦 Smaller regional banks can now apply to go nationwide
• 🖥️ More low-cost, online-only banks can open, and
• 🌏 Foreign banks in Korea will have lighter capital requirements.

Why? 

President Yoon (who took office last year) has openly criticised the sector, saying a lack of competition has enabled Korea’s five main banks to enjoy a “money feast” (anyone else love that term?) at the expense of the people.

Intrigue’s take: Like any other advanced economy, meaningful growth in South Korea will increasingly require tough reforms. And that often means taking on powerful oligopolies.

So in theory, Yoon’s reforms will leave more cash in Korean pockets, and less “money feasts” (🥰) for the bankers. But in practice, the question is how many Koreans will actually move their accounts to new, small, and unfamiliar banks.

Also worth noting:

• Shares in Korea’s big incumbent banks dropped on the news, while shares in some of Korea’s smaller regional players jumped.