The FSC announced its plan to nurture mega-scale investment banks. Korea’s securities firms are not only small in equity capital volume but also too much geared to brokerage business. Due to their comparatively small equity capital volume, domestic securities companies have been reluctant in making investment in innovative technology and businesses.
In order to encourage more creative ideas and technologies, securities firms’ IB functions – focusing in corporate lending and chenneling risk capital to innovative business – must be strengthened.
To such backdrop, securities firms will be allowed to enage in a broader scope of businesses to enable them to boostr equity capital volume. For example, securities firms with equity capital of approximately KRW 4 trillion will be permitted to issue promissory notes and engage in foreign currency exchange businesses.
Relevant laws must be revised and there is still a long way to go until the coming of a mega-IB in Korea, but it is undeniable that the FSC took a very meaningful step. Who knows a global IB like Goldman Sachs and Morgan Stanley will appear in Korea?
click to read the related press release -> http://www.fsc.go.kr/downManager?bbsid=BBS0048&no=108957