South Korean entity tasked to oversee the financial sector, Financial Services Commission (FSC), is working on a draft bill banning cross-shareholding between non-financial and financial companies. According to FSC, reciprocal shareholding, presents a risk not only for the companies concerned but also for the financial sector in general. Samsung, Hyundai Motor, Hanwha and Lotte stand among the seven major groups concerned with this measure.
Samsung group is in possession of an inextricable tangle of cross-shareholding. The holding that controls insurance companies (Samsung Life Insurance and Samsung Fire & Marine Insurance) is likely to end up having to cede shares worth 21 000 billion KRW (20 billion USD) of some of its companies. Its life subsidiary, Samsung Life Insurance, holds, on its part, 7.55% of the capital of Samsung Electronics.
This shareholding is considered ineligible according to the new provision due to come into effect in July 2018. Investment percentage for insurance companies in non-financial companies is henceforth capped at 3% of the overall assets.
Read also: