Antitrust fines to hit brokerage, bank earnings but leave capital buffers intact: KIS report
Korea’s largest-ever antitrust fine will cut into this year’s earnings at the brokerages and banks that underwrite government debt, but it is unlikely to weaken their capital buffers, according to Korea Investors Service (KIS), a Moody’s affiliate. In a report released earlier this week, the credit rating agency said the penalties imposed by the Korea Fair Trade Commission (FTC) will make “a…
Korea's largest antitrust fine will impact earnings for the country's top brokerages and banks, but it will not diminish their capital reserves, according to Korea Investors Service (KIS), a Moody's subsidiary. The report, released earlier this week, noted that the penalties from the Korea Fair Trade Commission (FTC) will result in a temporary drop in profitability, particularly for the institutions facing the highest fines.
KIS affirmed that the firms' capital strength and earnings from the first half of the year will be sufficient to absorb the costs, presenting a significant yet manageable financial challenge for Korea's leading financial institutions. The regulatory action follows an investigation into primary dealers in the country's sovereign debt market.
The FTC announced corrective orders on Wednesday and imposed a total of roughly 1.6 trillion won ($1.2 billion) in combined fines on 15 financial institutions, all of which are designated primary dealers tasked with underwriting Korean Treasury bonds, for restricting competition.
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