The government's plan to foster mega-sized investment banks (IBs) will likely be hampered by a controversial rule that restricts their investments in the real estate sector, industry observers said Friday.

Under the government's plan, 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).

But IBs will have to limit their investments in the property sector to below 10 percent of their capital, a rule that some analysts say aims to prohibit real estate speculation.

The government's plan also puts its priority on managing the liquidity of IBs, a preventive measure as many financial firms collapsed due to a liquidly crisis during the 1997 financial crisis.

An industry observer said the government's plan may discourage IBs' investments.

"It would be difficult for us to find profit-making investment assets," the observer said.

An official at the Financial Services Commission (FSC) said a limit on investments in the property sector is necessary for IBs to prevent them from pumping too much liquidity into the real estate sector.

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.

The FSC plans to put the new rules into effect in the second half of next year. (Yonhap)