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Korea’s Major Securities Companies Have Fierce Competition before Launch of Mega IBs
Expanding Commercial Loans
Korea’s Major Securities Companies Have Fierce Competition before Launch of Mega IBs
  • By Yoon Yung Sil
  • March 20, 2018, 01:45
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South Korea’s major securities companies’ underhanded competition in the investment banking (IB) sector is getting fierce before the launch of mega IBs.
South Korea’s major securities companies’ underhanded competition in the investment banking (IB) sector is getting fierce before the launch of mega IBs.

 

South Korea’s major securities companies have greatly expanded commercial loans last year as their underhanded competition in the investment banking (IB) sector is getting fierce before the launch of mega IBs. 

According to IB industry sources on March 19, the total amount of commercial loans of the nation’s top five securities firms came to 6.04 trillion won (US$5.64 billion) as of the end of September last year. The figure is up 82.9 percent from 3.3 trillion won (US$3.08 billion) at the end of 2016. Commercial loans are offered to business owners from financial institutions to finance the growth of their businesses, including loan, guarantees and investments.

Samsung Securities Co. had the largest amount of commercial loans at 1.64 trillion won (US$1.53 billion) as of the end of September last year, followed by KB Securities Co. at 1.5 trillion won (US$1.39 billion), NH Investment & Securities Co. at 1.43 trillion won (US$1.33 billion), Mirae Asset Daewoo Securities Co. at 829.8 billion won (US$774.07 million) and Korea Investment & Securities Co. at 658.8 billion won (US$614.55 million).

In particular, Samsung Securities showed the biggest growth in commercial loans compared to the end of 2016. The company’s commercial loans increased a whopping 117.7 percent in nine months from 751.1 billion won (US$700.65 million) at the end of 2016.

An official from the IB industry said, “Samsung Securities failed to receive a license for issuing promissory notes due to the eligibility of major shareholders last year. Accordingly, the company has been seeking to strengthen its competitiveness in the IB sector by expanding commercial loans.”

In addition, the amount of debt guarantees of major securities companies showed an increase. The combined amount of debt guarantees of the nation’s five leading securities firms stood at 12.52 trillion won (US$11.68 billion) as of the end of September last year, up 13.7 percent from 11.01 trillion won (US$10.27 billion) at the end of 2016.

As there is strong competition in the IB sector, major securities firms are aggressively raising funds by issuing equity-linked securities and corporate bonds.

According to the IB industry, Samsung Securities issued 200 billion won (US$186.45 million) worth of corporate bonds in December last year and an additional 300 billion won (US$279.64 million) in January. KB Securities and Korea Investment & Securities issued 500 billion won (US$466.11 million) and 200 billion won (US$186.45 million) worth of corporate bonds, respectively, this year alone.