SEOUL, Dec. 29 (Korea Bizwire) – South Korea said Thursday it will revise regulations on the capital market in a bid to foster mega-sized investment banks (IBs) here modeled after Goldman Sachs.
The Financial Services Commission (FSC) notified the public of the revision plan in which local brokerages with a huge capital base will be allowed to broaden their businesses beyond brokerage services.
IBs with 4 trillion won (US$3.3 billion) or more in equity capital will be eligible for short-term corporate lending, such as the issuance of commercial papers.
Securities firms with equity capital of 8 trillion won or more will be able to launch investment management accounts (IMAs).
Currently, three local related firms — Mirae Asset Daewoo Securities Co., NH Investment & Securities Co. and Korea Investment & Securities Co. — have equity capital of 4 trillion won or more.
Samsung Securities Co. will join the club once its ongoing paid-in capital increase process is completed.
If KB Investment & Securities mergers with Hyundai Securities early next year as scheduled, its equity capital will come close to 4 trillion won as well.
This will likely herald fierce competition among the big five securities companies amid the government’s policy support.
The FSC plans to put the new rules into effect in the second half of next year.