The Financial Services Commission of South Korea is planning to release a new plan in March this year in order to attract more foreign financial companies into the South Korean market by means of its National Pension Service (NPS), one of the world’s three largest pension funds with an asset under management of 544 trillion won (US$462 billion).
According to the plan, the National Pension Service is to choose from those running local subsidiaries, branches or offices in South Korea or give incentives to such companies in selecting its fiduciary overseas investment managers.
At present, approximately 24.1% of the National Pension Service’s assets are invested in foreign stocks, bonds, real estate, infrastructure, etc. In addition, a total of 167 foreign financial companies are currently in fiduciary management contract with the National Pension Service, including investment banks such as Goldman Sachs and Morgan Stanley and asset management companies like Franklin Templeton. According to the Financial Supervisory Service, 48 global investment banks and asset management companies are doing business in South Korea at this moment. For instance, Macquarie and BlackRock are running their subsidiaries, Merrill Lynch and JP Morgan have their branches and Morgan Stanley is running its office in the country. It is expected that more than 100 financial institutions can be attracted into the market following the change in system regarding the National Pension Service.
The plan is also to eliminate many regulations applied to foreign financial companies doing business in the country. For example, they have to have a support team for each of their subsidiaries in the fields of banking, insurance, securities and so on as of now and a single executive cannot hold positions in two or more of them at the same time, which resulted in the size of an organization exceeding the actual ratio of business in South Korea, but the new plan stipulates that a support team belonging to one subsidiary can provide assistance for other subsidiaries as well and additional positions are allowed for executives.