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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, August 10 — South Korea’s financial authorities have begun formal reviews to designate securities firms with at least KRW 8 trillion in equity capital as “full-service investment banks” authorized to issue Integrated Investment Accounts (IMA). Mirae Asset Securities, Korea Investment & Securities, and NH Investment & Securities are vying for the designation.
According to the Financial Services Commission (FSC), Mirae Asset Securities and Korea Investment & Securities have recently submitted applications for the KRW 8 trillion designation, while NH Investment & Securities plans to apply in the third quarter after completing a KRW 650 billion rights issue to meet the capital requirement. The FSC confirmed that companies surpassing the threshold via capital increases are eligible for review.
Under the FSC’s “Corporate Finance Enhancement Plan for the Securities Industry” announced in April, the regulator intends to name the first KRW 8 trillion-class full-service investment bank by the end of the year. The designation allows firms to issue IMAs — accounts that pool client deposits to invest in corporate finance assets and return profits to clients — in addition to issuing short-term notes. With both IMAs and short-term notes, firms can raise up to 300% of their equity capital (200% via notes and an additional 100% via IMAs). Although the IMA system was introduced in 2017, no firm has yet been approved to issue them.
The race was initially expected to be a two-way contest between Mirae Asset and Korea Investment, both of which already exceed the capital requirement. Mirae Asset surpassed KRW 8 trillion in 2018 following a KRW 700 billion capital increase, while Korea Investment crossed the threshold in 2023 with a KRW 400 billion capital raise. However, NH Investment has now entered the competition, with equity capital of KRW 7.4 trillion at the end of last year and plans to exceed KRW 8 trillion after its upcoming rights issue.
Firms are rushing to apply before stricter eligibility rules take effect in 2025, when the equity requirement must be met for two consecutive fiscal years, alongside new criteria on business plans, social creditworthiness, and controlling shareholder qualifications. For 2024, the current requirements will apply.
The FSC said the review will comprehensively assess each firm’s venture capital supply plans, IMA risk management capabilities, and overall risk profile. The Financial Supervisory Service (FSS), which handles the review process, has increased its licensing staff from two to five to expedite the assessments, aiming to complete the designation within the year.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
