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Investment Management

2005/12/05

UBS Set to Buy Daehan Investment Management

UBS may takeover Daehan Investment Trust Management in a bid to muscle into the nation??s lucrative asset management market, according to an official of the Financial Supervisory Service (FSS) Tuesday.

The Swiss bank and other international financial services firms, including Goldman Sachs, have been in talks with Hana Bank, the nation??s mid-sized lender, for more than a year to acquire a 51 percent stake in the bank??s asset management arm. ``As far as I know, Hana Bank and UBS have been in in-depth talks," the official said. Both parties look into whether the deal will break a condition of a lock-up to one year made when Hana Bank signed a takeover deal with the state-run Korea Deposit Insurance Corporation to acquire Daehan last May, he added. The UBS has expressed a strong wish to acquire Daehan Investment Trust Management to tap the nation??s fast-growing asset investment management market. UBS has been looking for a local partner to enter the local asset management investment management market, while some global firms, including JP Morgan, Alliance Capital, GIC and ING Group have sought to set up an independent branch. As of now, about 11 foreign asset management firms are doing business here, with about 17.5 percent of the market. Other foreign players stepped up their entry into the market as the FSS has sped up streamlining regulations on the entry and withdrawal of an asset management firm. The asset management market in Korea, which will soon be an aged society, is expected to expand five times to 1,000 trillion won by 2010 from about 200 trillion won as of 2004, Samsung Securities said. A Hana Bank official who is close to the deal, however, declined to comment on who the final bidder will be, saying nothing has been decided yet and the talks are still under way.

Hana Bank has pushed for the sale of Daehan Investment Trust to secure funds to bid for its smaller rival Korea Exchange Bank, whose largest shareholder, Lone Star, a U.S. private equity fund, started the sale process later this year.

Companies urged to adopt English in market filings

Korea's top financial regulator said it will encourage domestic companies to issue bilingual corporate statements in an effort to improve the environment for foreign investors. "We will urge companies listed here and abroad to post regulatory filings in English and also submit an English summary of filings written in Korean," Jeon Hong-yul, assistant governor of the Financial Supervisory Service, said at a press briefing yesterday.

Currently, 34 Korean companies listed on local stock markets issue depository receipts on foreign stock exchanges and file financial statements and other information in English to foreign regulators. "We will also ask companies to post corporate statements produced for investors' conferences overseas, or other documents for foreign investors who have large stakes in the companies, in English," Mr. Jeon said. As a first step, the regulator will establish an English version of its online regulatory filing bulletin board, on which investors can see corporate filings posted by listed companies. The new online English bulletin board system, to be established by September 2006, will begin a pilot scheme in October, and start full-scale operations in March 2007, he said. Mr. Jeon stressed the agency will urge more companies to provide updated corporate information on their Web sites.

"We will ease restrictions related to regulatory filings for local companies that update their corporate information more frequently online." He noted the agency will begin enforcing new rules on corporate filing practices from January 2006, as scheduled. The new rules require all listed companies to post any regulatory filings between 7 a.m. and 6 p.m., a reduction from the current 7 a.m. to 9 p.m., and prohibit companies from posting filings on weekends. Many Korean investors have complained bitterly that local companies wait until weekends or after hours to post poor earnings reports to avoid incurring the wrath of the market.

Listed Firms to Start English Disclosure Next Yr

Regulators are moving to adopt an English disclosure system in phases from late next year to offer foreign investors easier access to information of listed companies, the Financial Supervisory Service (FSS) said Tuesday.

The FSS plan comes as part of its moves to internationalize the local bourse and attract more foreign investors into the market.

``As an initial stage, the FSS will guide companies listed both on local and overseas stock markets to add English versions to their Korean regulatory filings,???? said Jeon Hong-yul, deputy governor of the Financial Supervisory Service (FSS), in a press briefing.

``Listed firms?? investor relations materials in English will also be disclosed under the new system,???? Jeon said.

``The local stock market will fully adopt the English disclosure system by March 2007. For that reason, the FSS will build the next generation extensible business reporting language (XBRL)-based DART system,???? he said.

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