​Financial Supervisory Service to inspect real estate PF… Regular inspection of Yuanta and Hyundai Motor Securities

The Financial Supervisory Service will conduct regular inspections of Yuanta Securities and Hyundai Motor Securities this year. While looking at the overall management situation, we will start to check whether real estate project financing (PF) is insolvent. Among asset management companies, Hanwha Asset Management and NH Amundi Asset Management will receive regular inspections within the year.

According to the financial investment industry on the 15th, the FSS plans to inspect Yuanta Securities and Hanwha Asset Management in the first half of this year, and Hyundai Motor Securities and NH Amundi Asset Management in the second half. Regarding Hanwha Asset Management, the inspection will begin next month at the earliest. As it is a regular inspection conducted according to the annual plan, we look into the overall management of the company.

Yuanta Securities was subject to regular inspection for the first time after changing its name from Tongyang Securities in 2014, and Hyundai Motor Securities is subject to regular inspection in 12 years since 2011. Hanwha Asset Management and NH Amundi Management are the first regular inspections since 2011 and 2018, respectively.

In particular, it is expected to focus on soundness such as real estate PF insolvency. As of the end of September of last year, the delinquency rate for real estate PF loans at securities firms was 8.2%, more than doubling from the end of the previous year (3.7%). In addition, in the second half of last year, a financial market crunch occurred due to the so-called ‘Legoland Incident’. At the time, the PF-assets-backed commercial paper (ABCP) guaranteed by small and medium-sized securities companies was cited as the epicenter of the market crunch.

Both Hyundai Motor Securities and Yuanta Securities are companies whose performance decreased last year. Yuanta Securities recorded a net profit of 45.1 billion won last year, which is a 70% drop from the previous year (150.6 billion won). Hyundai Motor Securities also recorded 85.7 billion won in net profit as of September last year, down 16.4 percent from a year ago (102.5 billion won).

In addition, the Financial Supervisory Service plans to complete the entire investigation of private equity management companies, which began in July 2020, by the end of the year. During this month, regular inspections of Anda Asset Management and Samsung SRA Asset Management are scheduled to take place.