Copyright 2000 Asia Pulse Pte Limited
ASIA PULSE
June
15, 2000
HEADLINE:
S KOREA DRAWS UP GUIDELINE FOR FINANCIAL HOLDING CO
The Finance and Economy Ministry Thursday formulated a bill on financial holding companies.
The bill is designed to consolidate financial institutions under the umbrella of a holding company in a bid to help domestic institutions survive harsh international competition.
The bill applies a 4-percent ownership limit on existing financial institutions but grants exceptions to certain financial specialists.
Financial affiliates spun off from the nation's top 30 business groups are allowed to own a financial holding company five years after they establish their independence.
The bill requires holding companies to keep debt ratios below 100 percent of net worth.
Holding companies are expected to forestall successive
bankruptcies
resulting from the collapse of closely affiliated firms. Currently, large groups are subject to such a domino effect since affiliates are bound tightly together through cross-equity investments.
(Yonhap)