By Lee Hyo-sik
Staff Reporter
Savings banks, regional agricultural cooperatives and other small-scale financial institutions will be able to sell funds investing in equities, bonds and other financial products from next year. Currently, only banks, securities firms and insurers are allowed to market and sell indirect funds.
The Ministry of Finance and Economy said Wednesday it has decided to enable savings banks, provincial agricultural cooperatives and village-based savings bodies to sell funds to retail customers from February next year to foster competition among financial institutions and help them advance into the domestic asset management industry.
But it said the financial institutions wanting to sell funds will be required to meet certain criteria in their governance structure, financial soundness, the size of capital and manpower. The ministry plans to revise relevant laws and put such measures in place by next February when the Capital Market Integration Act goes into effect.
Koreans have been putting greater amounts of money into funds investing in equities and other financial products over the past few years to increase personal wealth amid the bullish stock market runs at home and abroad. Traditionally, as a way of making money, people preferred to either invest in real estate, or put money in savings deposits at banks that offer fixed interests.
A ministry official said if small financial services companies are permitted to sell funds, retail investors will have more choices in where they purchase the indirect investment instruments, adding this will lead to increased competition among sellers, and lower sales and operating fees.
``The change will also help develop the local asset management industry. The government also plans to ease rules allowing more newcomers to enter and operate in the asset management market,'' he said.