The nation’s financial regulator on Monday gave approval to five brokerage companies on starting investment banking businesses, as part of the government’s economic blueprint to boost the global competitiveness of local financial players.

The five securities firms are Mirae Asset Daewoo Securities, NH Investment & Securities, Korea Investment & Securities, KB Securities and Samsung Securities, according to the Financial Services Commission.

Among them, Korea Investment & Securities was the only one allowed to do short-term corporate lending, a function considered a profitable key business for investment banks.

The remaining four brokerages may later qualify for the given sector, depending on their financial soundness, according to the FSC. The timeline for further review, however, remains unclear.

“Various channels will be established in order to smoothly supply funds to companies and to secure our economy’s new growth engines,” said FSC Chairman Choi Jong-ku in a statement.

The latest investment banking licenses will promote the brokerages’ competition and innovation against banks, he added.

The FSC’s decision came as a follow-up measure to its earlier announcement made last year that investment banks with 4 trillion won ($3.6 billion) or more in equity capital should qualify for short-term corporate lending business.

Brokerages with equity capital of 8 trillion won or more will even be able to launch investment management accounts.

The idea was to help local financial companies step up into investment banks with competitiveness in the global market but also triggered some conflicts between securities and banks, with the latter claiming a violation of business realm.

Of the licensees, Mirae Asset Daewoo Securities topped in equity capital, with 7.1 million won as of the end of June this year, followed by NH Investment & Securities with 4.6 trillion won. Korea Investment & Securities came third with 4.3 trillion won. 

By Bae Hyun-jung (tellme@heraldcorp.com)