Toss Bank suspends lending services on authorities’ debt limit
Employees of Toss Bank are seen at headquarters in Seoul on October 5. (Yonhap)
Toss Bank, South Korea’s third-largest internet-only bank, announced on Oct. 14 that it would suspend new lending until the end of this year, after financial authorities refused to increase the bank’s loan limit. new bank.
The banking arm of fintech giant Viva Republica said its 500 billion won ($ 422 million) loan limit ran out by 1 p.m. on October 14 and decided to suspend lending services.
“The decision is taken to comply with the government’s household debt stabilization policy and also after taking into account all market conditions,” said an official from Toss Bank.
Toss launched its official operation on October 5 with 1.7 million registered users ahead of launch.
Almost 300 billion won, or 60% of the lenders’ fund, were loaned in just four days.
When applying for a banking license in 2019, Toss Bank said it planned to lend 469.3 billion won in its first year, 34.9% of which the lender promised to distribute to holders of weak credit and way. Expanding financial inclusion for lean filers, who do not have access to decent financial services, is one of the government’s goals and motivations for approving internet-only lenders Kakao Bank, K bank and Toss Bank .
However, the government seems more concerned about the country’s growing household debt, which stood at 1.052 trillion won ($ 888 billion) at the end of August, adding 6.5 trillion won the previous year. Despite the government’s efforts, loan growth has shown no signs of slowing down as more people borrowed to buy a home.
In August, financial authorities ordered local banks to stick to a maximum of 6% of total loan growth, and lenders are also tightening their grip on loan amounts in line with the new guidelines.
Analysts said these lending regulations could take a toll on internet-only banks.
“If household lending regulations are applied equally to Internet-only banks, they could hurt their growth,” said Jun Bae-seung, analyst at EBest Investment and Securities. “Toss Bank may need to revise its growth strategy.”
Concern over regulation seems to have a negative impact on the market valuation of exclusively Internet banks.
Kakao Bank shares plunged 41%, from their peak of 92,000 won on August 19 to 54,100 won on October 12. the lender can set itself apart from its traditional competitors.
K bank, the country’s largest internet-only bank, saw its market valuation jump from 13 trillion won in September to 6.4 trillion won this week in the over-the-counter market.
Meanwhile, Toss Bank also said it is opening the service to some 1.1 million pre-registered users online on October 14 afternoon. The bank attracted nearly 1.7 million pre-registrations ahead of launch and gradually opened up its services in order of registration.
By Park Ga-young ([email protected])