Eye on the prize in Korea's banking sector

Korean banks plan to get big in 2010. Indeed, this year promises the biggest shake-up in Korea's banking sector since 12 years ago when, during the worst of the Asian crisis, the government closed down a third of the country's merchant banks, nationalised some of the commercial banks and allowed foreign ownership of others. But, rather than retreat, Korean banks are now looking to become megabanks.

It might seem an odd objective when the US "too-big-to-fail" paradigm has suffered such a hammering since the collapse of Lehman Brothers in September 2008. Even the investment bank model, apparently perfected by Wall Street's blue-blooded titans, suddenly held less appeal to Korean regulators who were ushering in a new, permissive financial industry structure under the Financial Investment Services and Capital Markets Act (Fiscma).