April 20, 2024

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[THE INVESTOR] Kakao Corp., the company behind Korea’s No.1 mobile messenger KakaoTalk, said it is qualified to become the largest shareholder of online-only Kakao Bank.

“Precedents show that the criminal records of the absorbed company Kakao M will not be transferred to the parent company,” Kakao said in a statement.

The comments came after news reports pointed out that Kakao M’s previous violation of the local Fair Trade Act would hinder Kakao’s attempts to become the largest shareholder of Kakao Bank. 

Kakao plans to merge with Kakao M, its entertainment affiliate, to expand business collaborations. In March 2013, the latter was fined 100 million won (US$89,307) for rigging the price of online songs.

The debate over Kakao’s eligibility emerged after Yeo Min-soo, co-CEO of the mobile company, earlier this month hinted at expanding the firm’s stake in the leading internet-only bank as the government moves to relax strict laws to nurture online banks.

“I believe we have the option to become the largest shareholder by acquiring additional shares once the banking law is relaxed,” Yeo said on Aug. 9.

Kakao is the second-largest shareholder of Kakao Bank with a 10 percent stake, following Korea Investment Holdings with a 58 percent stake.

For a non-financial entity to acquire more than 10 percent stake in a bank as an exception, it must get approval from the Financial Services Commission. One of the conditions is that the entity should have no record of violating financial laws and the Fair Trade Act.

By Park Ga-young (gypark@heraldcorp.com)