[THE INVESTOR] Shinhan Financial Group, a major South Korean banking group, has decided to increase capital by 500 billion won (US$439.63 million) through rights issue in a bid to morph into an investment bank, the group said on July 21.

With the proposed capital increase the firm’s equity capital will reach over 3 trillion won, the minimum threshold level to meet the government’s requirement to receive official permits to conduct a full-range of investment banking activities. 
From 2013, the nation’s financial regulator has given permission to financial institutions as part of the government’s plan to nurture the local capital market by allowing brokerage houses to tap into investment banking business.

Shinhan Financial aims to become the seventh brokerage firm to clinch the license, following other top players including Samsung Securities, Hyundai Securities, Woori Investment & Securities, NH Investment & Securities, Korea Investment & Securities and Mirae Asset Daewoo.

“The decision comes as a preemptive measure against local securities firms’ M&A trend and to enhance competitiveness of our equity sector amid low interest rates and low growth environment,” a Shinhan Financial Group‘s official said.

Recently, Korean brokerage houses have been pursuing aggressive acquisitions including Mirae Asset Securities which bought Daewoo Securities and KB Financial Group which took over Hyundai Securities.

An approved investment bank can offer a bundled package of investment services, otherwise known as the prime brokerage, ranging from asset management to lending and consulting to big institutions or financial firms including foreign players or pension funds.

By Park Han-na (hnpark@heraldcorp.com)