Korea needs investment banks: FSC chairman

Korea’s Financial Services Commission chairman Yim Jong-yong said Wednesday that the time is ripe for the country to have a brokerage with competitive investment banking operations.

In a regular media briefing, the chairman added that he supports the recent mergers and acquisitions of brokerages, pointing to NH Investment & Securities taking over Woori Investment & Securities, Mirae Asset Securities acquiring KDB Daewoo and KB Financial Group selected as a preferred bidder for Hyundai Securities.

“There is a need for local brokerages to boost their equity capital (through acquisitions) and become a giant investment bank that can provide corporate financing services,” Yim told reporters in Seoul on Wednesday.

“They can then provide services in venture capital, as well as risk management and solutions.”

KB Financial, which has a brokerage unit KB Investment & Securities, offered about 1 trillion won ($864 million) to acquire a 22.56 percent in Hyundai Securities from debt-laden Hyundai Merchant Marine and other HMM shareholders. This was KB Financial’s third attempt to buy a brokerage after failing in its bid for Woori Investment and Daewoo Securities.

The FSC will do its part in revising the current laws and systems enabling local brokerages to gain an edge in investment banking by the end of the first half of this year, the chairman said.

The financial regulatory policymaking body will also seek to revitalize the bond market by readjusting the current market policy enabling innovative companies with ratings of BBB and A to raise funds.

“We will look into touching on some of the policies on stock listings and bond issuances to boost their fund-raising,” Yim said.

The chairman also urged lawmakers to agree on a banking revision allowing industrial capital or nonbank companies to invest up to a 50 percent stake in a bank, currently from a 4 percent ownership under a law strictly separating industrial and financial capital.

This comes as Kakao, a mobile messenger company that was recently classified as a conglomerate, will be launching an Internet bank.

“We hope lawmakers will come back and discuss this matter after the election (next week),” he said.

By Park Hyong-ki (hkp@heraldcorp.com)