Published : Feb. 24, 2017 - 09:39
South Korea's financial authorities plan to ease restrictions on real estate investment by leading local investment banks in a bid to help them raise global competitiveness, officials said Friday.
The government is pushing to foster homegrown, mega-sized IBs modeled after Goldman Sachs. It has decided to revise legislation within this year to allow them to expand their businesses beyond brokerage services.
An image of capital investment provided from Yonhap News TV (Yonhap)
Under a proposed bill, IBs with 4 trillion won ($3.5 billion) or more in equity capital will be eligible for short-term corporate lending, such as the issuance of commercial papers.
If implemented, the new rules are expected to benefit five major securities firms: Mirae Asset Daewoo Securities, NH Investment & Securities, Korea Investment & Securities, KB Securities and Samsung Securities.
Brokerages with equity capital of 8 trillion won or more will also be able to launch investment management accounts.
The domestic securities industry, however, argued it's not enough.
They have called for the lifting of a limit on property investment to the maximum of 10 percent of raised funds.
The Financial Services Commission, the government's financial regulatory body, is reviewing their request to heighten the ratio to 30 percent, according to the officials.
"We will adequately reflect the opinion of large securities firms aiming to become mega-sized IBs in a rational level that does not undermine the purpose of related legislation," a government official said.
He added that it's difficult to remove the ceiling itself, given the need to curb the excessive capital inflow into the real estate market.
"There is talk of relaxing the limit to a certain extent," he said. (Yonhap)