South Korea allows new bank entrants for first time in 30 years

South Korea will allow new entrants to the banking sector for the first time in 30 years to spur competition after the government criticized the big bonuses paid to banking employees as interest rates rise, Report informs referring to The Financial Times.

The government will allow more online banks, permit commercial banking licenses for existing financial companies and ease the loan-to-deposit rules for local branches of foreign banks, the Financial Services Commission said on July 5. The measures come into effect immediately.

South Korea’s banking sector has been dominated by five lenders. The country’s banking sub-index fell 0.93 percent on July 5 afternoon on expectations of higher competition.

President Yoon Suk Yeol earlier this year accused the country’s banks of enjoying a “feast” of bonuses, adding that the sector made “easy” profits at the public’s expense through a rate gap between deposits and loans.