Financial Services Commission (FSC) Chairman Choi Jong-ku has told Samsung Life Insurance to sell off its stakes in Samsung Electronics.
“It is not desirable that financial subsidiaries of a conglomerate do not make any efforts to reduce their stakes in non-financial affiliates," Choi said at a meeting of the commission on April 20. "They need to take voluntary measures to reduce their shareholdings even before the relevant law is revised."
This remark is a sudden change in the top regulator's stance on the matter. Earlier, the FSC said that it would monitor situations regarding the revision of the law concerning Samsung Life Insurance. At present, multiple bills are pending in the National Assembly that would, if enacted, force Samsung Life Insurance to sell part of its Samsung Electronics shares.
The bills call for a life insurance unit of a conglomerate to value its stakes in non-financial affiliates of the business group based on the market prices of the shares instead of the acquisition cost.
The acquision cost of Samsung Life Insurance's stakes in Samsung Electronics is less than 3 percent of the insurance company's assets. But when calculated in terms of market price, the value of the shares exceed 8 percent of the insurer's assets.
So when the calculation criterion changes from acquisiton cost to market price, Samsung Life Insurance will have to sell of a large chunk of its stakes in Samsung Electroncis, which could destabilize the chaebol owner family's control of the electronics giant.
“The sale of the shares is a task closely associated with key economic policies such as economic democratization,” said a financial authority official, adding, “The FSC chairman told Samsung Life Insurance to take action voluntarily because simply waiting for the law to be revised will lead to no improvement at all.”