Ahead of the consolidated supervision guideline for financial groups that takes effect in July, Mirae Asset Group is grappling with its governance structure. This is because financial authorities are taking aim at Mirae Asset Group and Samsung Group over the governance structure problem before implementing the regulatory practices.
According to investment banking (IB) industry sources on May 9, the financial authorities pointed out problems related to financial group risks, such as cross shareholding between groups, off-balance sheet investment and capital expansion using loans. This is considered comments aimed directly at Mirae Asset Group.
Market experts believe that the financial authorities are practically asking Mirae Asset Group to introduce the holding company system through the latest consolidated supervision guideline.
Under Mirae Asset Group, Chairman Park Hyeon-joo is the largest shareholder of Mirae Asset Global Investments Co. and Mirae Asset Capital Co. Mirae Asset Global Investments owns a stake in Mirae Asset Capital and Mirae Asset Capital owns a stake in Mirae Asset Daewoo, playing a role as a holding company. Mirae Asset Capital is mostly owned by Chairman Park Hyeon-joo with 34.32 percent, Mirae Asset Global Investments with 29.53 percent and owner family’s firms – Mirae Asset Consulting Co. with 9.98 percent and Mirae Asset Fund Services Co. with 9.49 percent.
Mirae Asset Capital had a stake in financial affiliates with over 50 percent of total assets and was qualified for the company requiring to turn into a financial holding company by law at the end of September last year. However, the company managed to avoid the forced conversion by increasing short-term borrowings since then.
At a report released by Solidarity for Economic Reform in March 2016, Kim Sang-jo, then economics professor at Hansung University and current director of the Fair Trade Commission, said, “The dominant stockholder’s family companies, including Mirae Asset Consulting and Mirae Asset Capital that are a de facto holding company of the group, are employing an expedient to get around the regulations on holding companies.”
The market expects that Mirae Asset Group will avoid the forced holding company conversion by expanding business of Mirae Asset Capital or making Mirae Asset Daewoo as a main affiliate after the implementation of the consolidated supervision since the group believes that conversion into a holding company will not help increase profits.