Korea Securities Finance Corp. (KSFC) will focus on building a base for unleashing Cloud Funding this year, so that as many small investors can join the fund online as possible.
The company signed MOUs with three companies, including Open Trade, Wadis and O My Company. KSFC will take care of the deposits from small investors that were attracted by three agents for Could Funding. The company has also agreed with the agents to build basic infrastructure for information technology. President Jung Ji-won said the KSFC will faithfully carry out its services so that start-up business owners with creative ideas can secure enough funds, with the company playing the role of a bridge for the investors and the start-ups.
President Koh Yong-ki of Open Trade said the MOUs signed would help Cloud Funding settle in the financial market as soon as possible.
Established in 1955 to support the securities industry, the KSFC is the only securities finance company in Korea and provides various financial services, such as securities-backed loans and investors' deposits management to financial investment companies.
The KSFC was established for the purpose of “supplying funds to the securities market and performing specific tasks to contribute to capital market development, there by supporting national economic development.”
Categorized under the Korean Commercial Act, the KSFC was founded in October 1955 after obtaining a business approval from the Financial Services Commission.
Moody's Investors Service has assigned a first-time foreign currency issuer rating of Aa3 and a P-1 short-term foreign currency issuer rating to Korea Securities Finance Corporation (KSFC). The ratings have a stable outlook.
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The representatives of five firms and KSFC led by President Jung of KSFC, hold the copies of MOUs they signed to attract investors in the Cloud Funding on Jan. 13 at the KSFC office in Seoul.(Photos: KSFC)
Ratings Rationale
“The Aa3 rating incorporates baseline credit assessment (BCA) of a2, which reflects its financial strengths, underpinned by its low risk and liquid balance sheet, relatively stable earnings, strong asset quality and strong capitalization,” said Sophia Lee, a Moody's Vice-President and Senior Analyst. “It also takes into account its strong market positioning in areas such as securities lending and borrowing. However, it also considers the fact that its exposures are concentrated among securities firms, though this risk is mitigated by the fact that most of the loans are collateralized."
Lee continued, "The rating also incorporates two-notches of uplift from its a2 BCA, reflecting the policy role that the KSFC plays in Korea's securities market.”
The KSFC was established in 1955 to promote the development of Korea's capital markets by providing funding to the securities market and engaging in securities related businesses. Its key policy roles are providing liquidity to securities companies, managing customer accounts as the sole depository institution and offering services related to employee stock ownership plans. The KSFC also engages in commercial activities such as securities financing, lending and deposit taking. Its shareholders consist of the Korea Stock Exchange (11.35 percent), 17 banks and 28 securities firms.
The KSFC's lending business has strong asset quality, with a non-performing loans ratio of 0.02 percent as of September 2013. The KSFC's loan book makes up about 30 percent of its total assets and comprises mostly short-term loans, such as margin money lending where loans are over-collateralized. Margin calls are made where there is collateral short-fall. Discounted bills, its only unsecured credit exposure, account for about 13 percent of total lending, or 4 percent of total assets. The KSFC's industry and credit concentration risk is high as all exposures are to the securities industry.
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