Korea eases rules on overseas ownership; insurers can acquire banks
Insurers can invest in foreign financial and non-financial companies within regulatory boundaries.
South Korea’s financial regulatory reform committee concluded measures to ease rules on foreign ownership of financial entities by domestic companies.
During its 8th meeting last 17 July, the committee also discussed solutions to amp up licencing standards for mergers and discussed the latest updates on the implementation of reforms discussed previously.
Domestic banks, insurance companies, specialized credit finance companies, and fintech businesses will be allowed to invest in foreign financial and non-financial companies within regulatory boundaries in overseas markets.
For example, a credit finance company could acquire a rental car business abroad to expand sales.
Other adjustments made are on the maximum credit extension permitted for foreign subsidiaries will be relaxed, enabling financial companies to extend more credit (up to 10%) to their foreign subsidiaries during a certain period, initially set for the first three years.
Specific rules that are more suited to the domestic environment will be exempted or excluded from application to foreign subsidiaries.
Reporting and disclosure rules for financial companies operating and expanding overseas will be improved to eliminate redundancy and administrative burden.
The supervisory inspection and sanctions administration over foreign companies will focus more on prevention, improvement of operating practices, and adherence to prudential management and internal control.