April 19, 2024

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[THE INVESTOR] Korea’s third-largest conglomerate SK Group is expected to transfer ownership of a brokerage unit this week, but is still likely to face government sanctions for missing the deadline, industry sources said on Aug. 7. 

The group has been under pressure to sell SK Securities to CAPE Investment & Securities as the country’s fair trade law prohibits a holding company from owning a financial company. In August 2015, SK Group formed a holding company via the merger of SK Holdings and IT unit SK C&C. It was given a deadline of Aug. 2 to sell SK Securities.

CAPE was named as the preferred bidder for the sale on July 25 but the two companies have not yet sealed a deal as of Aug. 7.

While some market watchers expect the Fair Trade Commission to take into consideration that a preferred bidder was chosen before the deadline, critics say the antitrust watchdog, whose chief has promised to strictly enforce the law on conglomerates, will impose fines anyway.

The FTC will review the matter once the sale process is completed. A possible sanction against the group includes a fine as high as 10 percent of the book value of the securities firm.

In its bid to strengthen its private equity and brokerage business, CAPE is buying 10.04-percent stake in SK Securities for 60 billion won (US$53 million). Once the sale is completed, SK Securities will no longer be part of SK Group after 25 years of being an affiliate.

By Park Ga-young (gypark@heraldcorp.com)