SEOUL, Jan. 7 (Yonhap) -- South Korea will push to exclude special purpose companies (SPCs) and real estate firms from the scope of small and medium-sized companies eligible for loans from brokerages, the chief financial regulator said Tuesday.
Loans from securities firms were meant to be funneled to venture firms and small and medium-sized companies, but some of the loans ended up in property development projects through SPCs that are usually considered smaller firms, according to the Financial Services Commission (FSC).
Securities firms extended more than 5 trillion won (US$4.28 billion) to special purpose companies, 40 percent of which was funneled to real estate sector, FSC Chairman Eun Sung-soo said, without elaborating on a time frame.
"It is never desirable for investment banking divisions of securities companies to concentrate on real estate," Eun said in a meeting with top executives of securities firms.
He called for efforts to ensure securities firms can extend loans to innovative companies.
Last month, Eun asked financial institutions to extend more capital to small and medium-sized companies with new technologies and growth potential.
South Korean financial institutions have excessively extended home-backed loans and other loans to households.
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