February 07, 2011
FSC promises a financial ‘big bang’
Goal will be to create globally competitive banks and funds
Kim Seok-dong, the chairman of the Financial Services Commission, promised yesterday to create a “revolutionary big bang” in the financial sector by easing capital market rules. He said the goal was to create competitive global financial players and aid the economy.
The FSC wants to revamp state-run financial bodies, promote the growth of local investment banks and ease regulations on local private equity and hedge funds in a bid to expand the financial market and provide increased financing for Korean companies operating abroad.
In a statement on the second anniversary of the Capital Market Consolidation Act, Kim said he would “retool” the law “on the whole to make it more market friendly.”
“Korean financial firms must move beyond the run-of-the-mill system in which they lend and collect interest,” Kim said.
“This time, I’m going to start a revolution .?.?. create an environment in which large financial firms can emerge and create explosive growth in business through regulatory reforms.”
The Capital Market Consolidation Act was meant to demolish barriers separating stock brokerages, futures trading and asset management, but has been criticized for failing to achieve its goal of boosting the local financial industry’s growth.
“If last time was a top-down attempt to create a framework, this time we will let the market take the lead in reforming [the capital market] to create a revolutionary big bang,” Kim said.
Kim said reforms would include restructuring state-run financial groups - such as the Export-Import Bank of Korea, Korea Development Bank, Korea Finance Corp. and Korea Trade Insurance Corp. - so they can better support the financing needs of Korean companies abroad.
The emergence of big Korean investment banks to rival Goldman Sachs and J.P. Morgan would help achieve the same goal.
There have been complaints that the lack of financial support has caused Korean companies to lose overseas project contracts, including the construction of nuclear power plants in Turkey, which was won by better-financed Japanese groups.
“Local companies tend to face limits in financing when on the verge of winning big projects,” Kim said. “It’s a shame that the government, if not local financial firms, couldn’t do it.”
The relaxation of rules on private equity and hedge funds would also help the restructuring of local companies, Kim said.
Based on his previous government record, analysts expected to Kim to take aggressive action after he was appointed to head the FSC last month, including tackling the regulatory fallout from the credit-card crisis in 2003 and playing a key role in drafting the Capital Market Consolidation Act.
“[Kim’s] impact can already be seen in the savings bank situation,” said one financial industry observer.
“As soon as [Kim] came into office, the market responded, with large financial groups announcing their interest in acquiring savings banks” to rescue them from bad construction loans.
http://joongangdaily.joins.com/article/view.asp?aid=2931849
FSC promises a financial ‘big bang’
Goal will be to create globally competitive banks and funds
Kim Seok-dong, the chairman of the Financial Services Commission, promised yesterday to create a “revolutionary big bang” in the financial sector by easing capital market rules. He said the goal was to create competitive global financial players and aid the economy.
The FSC wants to revamp state-run financial bodies, promote the growth of local investment banks and ease regulations on local private equity and hedge funds in a bid to expand the financial market and provide increased financing for Korean companies operating abroad.
In a statement on the second anniversary of the Capital Market Consolidation Act, Kim said he would “retool” the law “on the whole to make it more market friendly.”
“Korean financial firms must move beyond the run-of-the-mill system in which they lend and collect interest,” Kim said.
“This time, I’m going to start a revolution .?.?. create an environment in which large financial firms can emerge and create explosive growth in business through regulatory reforms.”
The Capital Market Consolidation Act was meant to demolish barriers separating stock brokerages, futures trading and asset management, but has been criticized for failing to achieve its goal of boosting the local financial industry’s growth.
“If last time was a top-down attempt to create a framework, this time we will let the market take the lead in reforming [the capital market] to create a revolutionary big bang,” Kim said.
Kim said reforms would include restructuring state-run financial groups - such as the Export-Import Bank of Korea, Korea Development Bank, Korea Finance Corp. and Korea Trade Insurance Corp. - so they can better support the financing needs of Korean companies abroad.
The emergence of big Korean investment banks to rival Goldman Sachs and J.P. Morgan would help achieve the same goal.
There have been complaints that the lack of financial support has caused Korean companies to lose overseas project contracts, including the construction of nuclear power plants in Turkey, which was won by better-financed Japanese groups.
“Local companies tend to face limits in financing when on the verge of winning big projects,” Kim said. “It’s a shame that the government, if not local financial firms, couldn’t do it.”
The relaxation of rules on private equity and hedge funds would also help the restructuring of local companies, Kim said.
Based on his previous government record, analysts expected to Kim to take aggressive action after he was appointed to head the FSC last month, including tackling the regulatory fallout from the credit-card crisis in 2003 and playing a key role in drafting the Capital Market Consolidation Act.
“[Kim’s] impact can already be seen in the savings bank situation,” said one financial industry observer.
“As soon as [Kim] came into office, the market responded, with large financial groups announcing their interest in acquiring savings banks” to rescue them from bad construction loans.
http://joongangdaily.joins.com/article/view.asp?aid=2931849
