Alphabiz - Regulators Considered Conditional Approval for Samsung Securities’ Promissory Note Business Before Review Suspension

Photo courtesy of Yonhap News

[Alpha Biz= Ellie Kim] South Korea’s financial authorities had considered granting conditional approval for Samsung Securities to launch its promissory note business, before ultimately suspending the review due to ongoing sanction procedures.

According to minutes of the Securities and Futures Commission released by the Financial Services Commission on June 7, the commission deliberated at its April 8 meeting to approve Samsung Securities’ application for a short-term financing business license—commonly known as a promissory note issuance license—on the condition that in-branch sales be suspended for one year starting April 15.

The commission also attached a clause stating that if the final sanctions imposed on Samsung Securities did not violate the firm’s social credibility requirements, the company would be allowed to resume sales immediately.

During the meeting, a commissioner asked whether the Financial Services Commission had urged consideration of conditional approval in light of the need to expand venture capital supply. Park Si-moon, a senior official from the Financial Supervisory Service, confirmed that such guidance had been given.

Another commissioner emphasized that prompt approval would help accelerate the supply of risk capital needed for the economy.

However, at a subsequent meeting on April 28, the Financial Services Commission decided to suspend the approval review process, creating an unusual divergence after the proposal had already passed the Securities and Futures Commission stage.

Industry observers attribute the reversal to heightened regulatory scrutiny on internal controls within financial institutions, which increased the burden of granting approval before finalizing sanctions.

Nevertheless, there is speculation that Samsung Securities could receive approval as early as next month if the sanctions are finalized within June, as both the Financial Services Commission and the Securities and Futures Commission had previously shown a favorable stance toward the license.

Earlier, the Financial Supervisory Service recommended heavy sanctions, including partial suspension of operations at certain branches, following an inspection of Samsung Securities. The final decision now awaits the Financial Services Commission.

Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)