By Park Hyong-ki
Staff Reporter
The country's financial regulator belatedly disciplined four secondary financial firms for violating rules separating finance and commerce.
The four disciplined by the Financial Supervisory Service (FSS) are Dongbu Life, Tong Yang Insurance, Korea Investment & Securities and Tong Yang Investment Bank.
The four insurance and securities companies were found to have expanded their shareholdings in non-financial units without seeking prior approval from the regulator.
Such acquisitions took place in the early 2000s. Although the FSS was aware of their wrongdoings, it had to hold off its disciplinary measures as the rules on finance and commerce separation were undergoing revisions.
``We had to wait until the rules were completely amended for clarity,'' said an FSS official, adding that it had ordered the four to dispose of their shareholdings in non-financial subsidiaries. He did not reveal the names of the units.
After revisions in January last year, regulators inspected the four companies to see whether they still held such equities, and briefed the Financial Services Commission (FSC), the nation's top financial policymaking body, last Friday.
As a result, the FSC imposed a fine of 20 million won each on the four firms, and ordered Dongbu Life to fully dispose of its shareholdings above the ceiling. The rest ― Tong Yang Insurance, Korea Investment & Securities and Tong Yang Investment Bank ― had already liquidated their shares.
By law, financial firms cannot own more than a 20 percent stake with voting rights in non-financial units, or virtually control such units with a 5 percent share, a move aimed at blocking financial firms from dominating non-core sectors such as manufacturing.
If they seek to expand their shareholdings, they need to get prior approval from the financial authorities.
Donbu Life increased its shareholdings with voting rights to 23 percent ― above the ceiling of 20 percent ― in a non-financial subsidiary.
``The companies did not seem to understand whether the rule applied to them as it was unclear at that time,'' said the official.
Also, non-financial companies are banned from owning more than a 4 percent stake in banks. This, however, is being reviewed to increase investments from domestic corporations to offset growing bank shareholdings by foreign investors.
phk@koreatimes.co.kr