[비즈한국] Douzone Bizon012510 announced on the 18th that it had participated in a third-party capital increase by Jeju Bank006220, acquiring all 5.669738 million newly issued shares for 57 billion won. The scheduled listing date for the new shares is May 26. Once the capital increase is finalized, Douzone Bizon will become the second-largest shareholder with a 14.99% stake in Jeju Bank. The current largest shareholder of Jeju Bank is Shinhan Financial Group055550, which holds a 75.31% stake.
Douzone Bizon had been pushing for the establishment of an internet-only bank since last year but withdrew its plans in March of this year. It intends to participate in the digital business sector by applying the digital technologies developed during that process to Jeju Bank. To this end, Douzone Bizon stated that it would invest the entire proceeds into the digital banking field.
The securities industry generally evaluates Douzone Bizon's investment positively. Kim Soo-jin, a researcher at Mirae Asset Securities, explained, "Fintech is the industry expected to see the most growth in the AI (artificial intelligence) era. Given the industry's nature of dealing with large volumes of data, there are endless possibilities for reducing costs and creating new services using AI," adding, "With over 130,000 corporate clients and an electronic tax invoice processing volume exceeding 300 trillion won, Douzone Bizon possesses richer corporate data than anyone else."
Kim So-hye, a researcher at Hanwha Investment & Securities, forecasted, "Jeju Bank holds various licenses that an internet-only bank would need," adding, "We expect the 'banking' component—the final piece of the puzzle for the integrated ERP (Enterprise Resource Planning) system owned by Douzone Bizon—to be realized."
The financial sector raises two questions regarding Douzone Bizon. One concerns control over the management of Jeju Bank, and the other concerns the inherent growth limitations of Jeju Bank. As the second-largest shareholder, it is difficult for Douzone Bizon to take the lead in managing Jeju Bank. The structure makes it difficult for Douzone Bizon's opinions to be accepted should management disagreements arise. Furthermore, as a regional bank, Jeju Bank has inherent growth limitations. For this reason, some analysts suggest that Douzone Bizon is using Jeju Bank as a stepping stone for a larger goal.
Shinhan Financial is the largest shareholder of Jeju Bank
Once the capital increase is complete, the stakes in Jeju Bank for Shinhan Financial Group and Douzone Bizon will be 64.01% and 14.99%, respectively. Although Douzone Bizon will be the second-largest shareholder, there is a significant gap compared to the stake held by the largest shareholder, Shinhan Financial Group. Major decision-making for Jeju Bank essentially rests with Shinhan Financial Group.
Shinhan Financial Group and Douzone Bizon are known to have a friendly relationship. When Douzone Bizon was pushing for the internet-only bank "Douzone Bank," it was reported that Shinhan Bank favorably considered participating in the consortium. Shinhan Bank currently holds a 2.04% stake in Douzone Bizon. In 2021, they collaborated to launch the "Douzone X SOL Biz Corporate Account."
However, one cannot guarantee that this friendly relationship will last forever. In particular, since Shinhan Financial Group does not operate under an owner-management system, the management direction could be completely overhauled if the leadership changes. The term of Jin Ok-dong, chairman of Shinhan Financial Group, is set to expire next March, leaving less than a year remaining.
It is realistically impossible for Douzone Bizon to purchase additional shares of Jeju Bank to become the largest shareholder. Under current law, non-financial entities cannot hold more than 15% of a regional bank (the limit is 4% for commercial banks). As an ICT company, Douzone Bizon is classified as a non-financial entity. Furthermore, current key executives at Jeju Bank, such as CEO Lee Hee-soo and Vice President Kim Ho-dae, are former Shinhan Bank employees. It will not be easy for Douzone Bizon to seize management control among them.
A Douzone Bizon official stated, "As we have built a foundation of trust by collaborating with Shinhan Financial in various fields, we plan to continue cooperating closely based on each other's expertise and strengths," adding, "We believe any minor disagreements that arise during the collaboration process can be sufficiently coordinated."
A stepping stone for another challenge at an internet-only bank?
Jeju Bank is considered to have growth limitations due to the nature of being a regional bank. Unlike commercial banks, regional banks have restricted business territories. Jeju Bank’s articles of incorporation state, "The business territory shall be Jeju Special Self-Governing Province, parts of Busan Metropolitan City, and Seoul Metropolitan City."
While some argue that the arrival of the fintech era has made it easier for regional banks to secure customers in the capital area, it is difficult to find Jeju Bank customers outside of Jeju. Jeju Bank is not aggressively operating in Seoul or Busan, either. Most of its products are intended for residents of Jeju Special Self-Governing Province. For this reason, few people outside of Jeju residents use Jeju Bank as their primary bank.
Jeju Bank has 30 branches nationwide. Excluding the Seoul and Busan branches, 28 of these branches are located in Jeju Special Self-Governing Province. Jeju Bank's net profit last year was 10.4 billion won. This is very small compared to the trillions of won in net profit earned by major commercial banks.
Some speculate that Douzone Bizon and Jeju Bank made this investment with an eye on the future. The analysis is that both companies are strengthening their capabilities to fully enter the internet-only bank market later. Douzone Bizon actually pursued an internet-only bank, and rumors of Jeju Bank entering the internet-only bank market have circulated in the past. However, Shinhan Financial Group clarified in 2022 that "rumors of Jeju Bank entering the internet-only bank market are not true." Regarding this, the aforementioned Douzone Bizon official said, "It is difficult to mention any specific direction or plan at this time."