Gov’t eases regulations for securities firms in drive to develop ‘mega investment banks’

[THE INVESTOR] The government will ease regulations on securities companies from 2017 as part of the plans to facilitate the growth of large investment banks.

Under the plans revealed on Aug. 2, securities companies will be categorized according to the size of their capital, and subjected to varying levels of deregulation.

Under the plans, securities firms with more than 4 trillion won (US$3.6 billion) but less than 8 trillion won capital will be allowed to issue promissory notes to raise capital. Promissory notes will be limited to 200 percent or less of the company’s capital. However, the securities companies will be required to use 50 percent or more of the raised funds for giving loans to corporations.

Securities firms with 4 trillion won or larger capital will also be allowed to provide foreign exchange services to corporate clients.

Those with capital exceeding 8 trillion won will be allowed to offer investment management accounts to private investors. The funds invested in the accounts will then be used to provide corporate loans. In addition, those falling in the top category will be allowed to offer real estate-backed securities, which can then be used to take out loans.

By Choi He-suk (cheesuk@heraldcorp.com)