South Korean major conglomerates such as Samsung Group, Hyundai Motor Group and Lotte Group that hold multiple financial companies will fall under closer scrutiny from authorities under an integrated supervision system that could go effective next year.

Under the new system, financial companies like Samsung Life Insurance that owns a heavy stake in non-financial companies would be required to increase its capital by shifting its portfolio into less risky assets.

The Financial Services Commission (FSC) announced a new integrated supervision system drawn up by its think tank during a public hearing held on Wednesday. The think tank has suggested three different options, and the FSC is currently reviewing what would be the best measure.

The regulation aims to protect consumers from corporate and financial malpractice such as inter-affiliate support through using customers’ money and to ensure the overall capital adequacy in relations to parent conglomerates, the FSC said.

To date, the FSC’s supervisory scope has been limited to regulating financial companies, and not their manufacturing parent groups. But following the implementation of the new supervision system, a financial company with stakes in non-financial affiliates must reflect potential risks of its interest in non-financial affiliates in its capital, according to an official from the think tank.

One of the most probable measures under this system is to comprehensively monitor and supervise financial companies affiliated with 17 major conglomerates, including Samsung Group, Hyundai Motor Group, Lotte Group and Hanwha Group, that own more than two financial affiliates in different business areas like insurance and securities regardless of their asset size.

If the new regulation is adopted as planned, Samsung Life Insurance that holds a 7.55 percent stake in Samsung Electronics would have to sell its interest in the tech sibling to bolster its capital and prevent possible trickle-down risks from it.

By Park Yoon-ye

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]