Seoul: The financial regulator said Tuesday that revamped rules on investment banks (IBs) will take effect in late August, encouraging them to increase investments in smaller firms and risky but profitable assets.
According to Yonhap News Agency, the Financial Services Commission (FSC) has announced that IBs will be able to be actively involved in corporate restructuring and increase their exposure to smaller firms under eased regulations on credit line ceilings.
The FSC stated that IBs with a capital base of 4 trillion won (US$2.69 billion) or more will be required to invest 25 percent of capital raised via commercial bill issuance in risky but profitable assets, such as low-rated firms and high-yield funds. In contrast, their ceiling on investments funded through the sale of commercial bills in real estate will be gradually cut to 15 percent in 2026 and 10 percent the following year from the current 30 percent.
The revamped rules will come as local IBs are largely focused on safe, low-yielding investments, such as real estate and others, according to the FSC.