SEOUL, Aug. 2 (Korea Bizwire) – South Korea’s top financial regulator unveiled a set of measures Tuesday to foster big investment banks, a move that could expedite the mergers and acquisitions of local brokerage houses.
The Financial Services Commission (FSC) said it will allow brokerage houses with a capital base worth more than 4 trillion won (US$3.6 billion) to issue promissory notes beginning next year, though they are required to lend more than 50 percent of the funds to companies.
As of March, NH Investment & Securities has a capital base worth 4.5 trillion won. Samsung Securities Co., the brokerage unit of South Korea’s largest conglomerate Samsung Group, has a capital base worth 3.4 trillion won.
Brokerage houses with a capital base worth more than 4 trillion won will also be allowed to handle currency exchange services for their corporate clients. Currently, brokerage houses can provide limited currency exchange services when clients buy or sell foreign stocks.
The FSC also said brokerage houses with a capital base worth more than 8 trillion won can operate investment management accounts, which manage the assets of their clients.
The financial regulator said it is considering mandating brokerage houses to use more than 70 percent of funds created through investment management accounts for business loans.
The measures — set to begin in the second quarter of next year — are the latest in a series of moves to promote local big investment banks that focus on lending for corporate clients.
The financial regulator also said it plans to strengthen the capability of local brokerage houses by asking Korea Investment Corp., South Korea’s sovereign fund, and other state-run policy lenders, to invest with local brokerage houses when the brokerage houses invest overseas or serve as advisers for local companies’ overseas investments.
Hwang Young-key, chairman of the Korea Financial Investment Association, welcomed the FSC’s new measures, saying that the measures could lead to fierce competition in the financial industry.