Brokers stop providing secured loans to equity investors

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An increasing number of securities companies have stopped providing security loans to equity investors.


An increasing number of securities companies are holding back securities-backed loans as leveraged equity investments grow rapidly.

On August 23, Korea Investment & Securities temporarily stopped providing new lending based on equities, funds, bonds and ELS. This is because the company has reached its credit supply limit.

The same is true in the insurance sector. On August 24, the Korea General Insurance Association and the Korea Life Insurance Association held a meeting to discuss family debt issues. The South Korean government recently advised insurance companies to better control their loans.

In the insurance sector, outstanding loans to households increased 6.5 percent from January to July this year to about 125 trillion won, while loans fell 0.7 percent in the same period the previous year. Growth rates exceed the government’s target rate for the financial sector as a whole, which is between 5 and 6 percent.

Credit card companies are also likely to become more meticulous. Household loans from lending financial corporations rose from 600 billion won or so to 5.4 trillion won from July last year to July this year.

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