K Bank CEO Addresses Concerns Over Upbit Partnership Ahead of IPO

K Bank CEO Addresses Concerns Over Upbit Partnership Ahead of IPO

K Bank is poised to proceed with its initial public offering (IPO) later this month amid concerns regarding its partnership with the cryptocurrency exchange Upbit. During a press conference held on October 15 in Yeouido, Seoul K Bank CEO Choi Woo-hyung reassured stakeholders by dismissing fears of a potential “bank run” stemming from Upbit customers withdrawing their deposits en masse.

Choi’s comments come in response to remarks from lawmaker Lee Kang-il of the Democratic Party of Korea who highlighted that approximately 20% of K Bank’s deposits are linked to Upbit. Lee warned that if transactions between Upbit and K Bank were disrupted it could trigger a bank run at K Bank. He expressed concern that the relationship between the two entities undermines the principle of separating finance and industry which is designed to prevent industrial capital from exerting influence over banks.

In response Choi stated that K Bank does not rely on Upbit customer deposits to fund loans. He clarified that deposits from Upbit customers are managed conservatively ensuring they are matched with highly liquid and stable investment options such as money market funds and government bonds. Choi emphasized that even in the event of a sudden stop in Upbit deposits he believes a bank run is highly unlikely due to this sound management strategy.

The relationship between K Bank and Upbit has been beneficial for both parties. Under South Korean law all KRW-trading cryptocurrency exchanges are required to partner with domestic banks to provide real-name verified fiat on/off ramps. During the pandemic K Bank and Upbit were the only bank-exchange duo to offer customers the ability to open bank accounts and digital wallets without needing to visit a branch in person enabling Upbit to capture over 80% of the domestic market.

While Upbit’s dominance has come under scrutiny from competitors K Bank has successfully attracted a younger demographic of customers due to its association with the popular exchange.

As K Bank prepares for its public offering which is scheduled for October 30 the firm plans to finalize its public offering bid on October 18 after completing demand forecasting. The bank intends to float 82 million shares with an expected share price between KRW 9,500 and KRW 12,000 ($6.99 to $8.83). If the upper price range is achieved the IPO could raise approximately $723.7 million for the neobank.

Choi reassured stakeholders by stating that the proportion of Upbit deposits on the K Bank platform has declined and that rising interest rates on fiat deposits are being offset by the bank’s other business interests. He also highlighted ongoing efforts to strengthen partnerships with Upbit indicating a positive outlook for their collaboration moving forward.