DGB Daegu Bank Approved to Transition to Nationwide Operator in South Korea

The Financial Services Commission (FSC) of South Korea decided to approve DGB Daegu Bank's application to make a transition from a region-specific operator to a nationwide commercial bank at the 9th regular meeting held on May 16. The FSC's approval will introduce a new nationwide commercial bank for the first time in 32 years since 1992, bringing the total number of nationwide banks to seven.

On July 5, 2023, the government announced plans to allow regional banks' transition to become nationwide banking business operators as part of its broader policy to promote fair and effective competition in the banking sector. As a follow-up measure, on January 31, 2024, the FSC and the FSS introduced specific method and procedures for authorizing a regional bank's transition to operate as a nationwide bank.

Following this, on February 7, 2024, DGB Daegu Bank applied for the "modification of conditions" specified under the Article 8 of the Banking Act. Upon receiving the application, the FSC and the FSS then went through a careful review process by having an external review committee and reached a decision that DGB Daegu Bank meets all the regulatory requirements necessary to be authorized to operate as a nationwide commercial bank.

With DGB Daegu Bank making a transition to operate as a nationwide operator, the authorities expect that there will be enhanced competition between banks with increased benefits and convenience afforded to consumers.

DGB Daegu Bank plans to open 14 new branches in the Seoul metropolitan area and across regions spanning from Chungcheong-do and Gangwon-do, which will help to boost the level of access to financial services for consumers residing in these regions.

In addition, DGB Daegu Bank plans to improve customers' access to financial services through advancement of its own service application and expanded partnership with third-party platforms, so as to help reduce costs and offer low interest rate products to consumers.

DGB Daegu Bank will also expand credit supply to the small- and medium-sized enterprises and individually own businesses that have mid-range credit standings in ways that fit the needs of operating regions. Even after becoming a nationwide banking business operator, DGB Daegu Bank will have its headquarters located in Daegu and continue to work on expanding credit supply in the region to support the growth of regional enterprises.

While authorizing DGB Daegu Bank's transition to operate as a nationwide commercial bank, the financial authorities have required it to periodically report the status of implementation regarding the improvement measures of its internal control and compliance system. Based on this periodic reporting, the financial authorities will continue to check the appropriateness of its internal control system and will require improvement in actions if deemed necessary.