K Bank, South Korea’s first internet-only lender, raised 30 billion won ($26.7 million) through a rights offering, falling far short of its original plan to pool 150 billion won that the company has hoped to use to expand its consumer loan business to prop up its profits.
The internet-only bank said Thursday it raised total 30 billion by issuing 6 million convertible shares at 5,000 won apiece to three major shareholders - KT Corp. Woori Bank and NH Investment & Securities Co. Its new paid-in capital reached 380 billion won after the rights offering.
Initially, the bank hoped to bump up its capital to 500 billion won through issuance of new shares worth 150 billion won - 120 billion won in common shares and 30 billion won in convertible bonds. But as some shareholders decided not to participate in its recapitalization drive, the company chose to issue only the non-voting convertible shares not to affect the existing stake ratio.
For recapitalization through a rights offering to go successful, all shareholders need to purchase new shares in proportion to their ownership percentage. Otherwise, the company needs to attract new investors.
This is not the first time K Bank has failed to issue new shares to its existing shareholders. Last September, the internet-only bank attempted to issue new shares worth 100 billion won but the capital-hike plan received a lukewarm response from its existing shareholders so that it had to draw investment from a new shareholder mdmworld.co.kr & Marketing Co. (MDM), a property developer.
The company has been seeking to bump up its capital since last year after explosive demand for its consumer loans that charge less than those from brick-and-mortar banks had eroded its capital faster than expected. The bank, which began operations in April as Korea’s first digital bank, had to temporarily suspend its signature credit-backed consumer loans in July last year.
Despite thinning capital, K Bank’s fund-raising plan won’t be easy without the easing in the country’s banking law that bans non-financial firms from owning a larger than 10-percent stake in a financial firm.
K Bank has the country’s telecom giant KT as its major shareholder. But according to the current law, the non-financial shareholder cannot raise its stake beyond 10 percent. Changes to the rule designed to keep chaebols away from the banking sector are strongly resisted by the ruling party.
K Bank hopes to pull additional equity investment from other shareholders like Woori Bank and DGB Financial Group or seek new investors.
The online-only lender’s other major shareholders include Woori Bank with a 13.8 percent stake, NH Investment & Securities with 10 percent, Hanwha Life Insurance Co. with 9.4 percent, and GS Retail Co. with 9.3 percent.
By Oh Chan-jong and Cho Jeehyun
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]