Watchdog to submit bill on eased ownership of financial holding firms

SEOUL, June 8 (Yonhap) -- South Korea's financial regulator said Monday it will
submit a revised bill to parliament to allow industrial groups to hold bigger
stakes in holding companies controlling a bank affiliate.
In late April, the National Assembly passed a bill to permit non-financial
companies to own up to 9 percent of shares in a lender, up from the previous 4
percent. But it did not approve a similar bill for easing their ownership of
financial services firms.
"The government plans to submit a bill this week to allow industrial groups to
hold up to 10 percent of stakes in financial services companies," the Financial
Services Commission (FSC) said in a statement.
Under South Korean banking law, a company is classified as an industrial group if
over 25 percent of its capital is invested in non-financial companies, or its
assets in such companies top 2 trillion won (US$1.59 billion).
The move is aimed at accelerating privatization of state-run financial
institutions and helping financial firms raise their capital by calling in
investments by industrial groups, FSC said. But critics argue that eased rules
would only help conglomerates, or chaebol, put banks under their wings, through
which they could easily get credit for expansion.
The government, which owns 100 percent of the state-run Korea Development Bank,
will put the lender and its three affiliates under a holding company in September
and will start to reduce the stake within five years.
Considering market conditions, South Korea also plans to unload part of its
stakes in Woori Finance Holdings Co. and the Industrial Bank of Korea (IBK). The
government currently owns 73 percent of Woori Finance and 57.7 percent of IBK.
sooyeon@yna.co.kr
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