Lotte Group Taking Up 70% of Cross Shareholding of h Korean Conglomerates

It has been found that the Lotte Group accounts for more than 70% of the circular shareholding of South Korean conglomerates. The Fair Trade Commission of South Korea announced on July 7 that conglomerates in the country are engaged in a total of 94 different circular shareholding cases and the Lotte Group is involved in 67 out of the total. The number is seven for each of the Samsung and Youngpoong Groups, four in the case of each of the Hyundai Motor Group and the Hyundai Development Company Group, three for Hyundai Department Store and one for each of the Daelim Group and the Hyundai Heavy Industries Group.

This year, the violations of banking-commerce separation increased a lot compared to last year as well. Specifically, the amount of investment in non-banking subsidiaries made by banking subsidiaries of such conglomerates increased 13% from a year ago to 33.9 billion won. Samsung, Dongbu and Kyobo Securities recorded the highest rates of increase.

According to the Fair Trade Commission, the Samsung, Hyundai Motor, Hyundai Heavy Industries and Hyundai Development Company Groups need to adopt holding company structures because they have circular shareholding structures and financial subsidiaries at the same time.

In the meantime, the average share ratio of the owners of the conglomerates and their family members in the conglomerates decreased to 4.1% while their average share ratio in subsidiary companies rose to 50.6%. When it comes to the 10 largest conglomerates, the average in them has remained at around 1% since 2000 and at 0.9% since 2014.