Chairman Choi Jong-gu of Financial Services Commission(FSC) answers questions by journalists at a recent media briefing on Samsung Life Insurance to ease selling its stakes in other Samsung affiliates including Samsung Electronics and Samsung Fire if its management rights are at stake. (Photo: FSC)

Chairman Choi Jong-gu of the Financial Services Commission (FSC) said companies subject to selling stakes in their affiliates may not have to get rid of them if their management rights are threatened.
The FSC will listen to their problems, and if appropriate, have them reflected in the National Assembly discussions or FSC policies, which is a step back from the previous tough stand by the financial authorities on the stakes in affiliates held by other affiliates.
The FSC chairman revealed the softened FSC stand on the issue in a briefing session with the media on May 9. He also said financial companies should take into consideration possible management control losses by foreign hedge funds and seek alternative measures to avoid such crises.
The FSC chairman’s statements have been taken as a signal that he could meet with Samsung Life and cooperate with the major Samsung affiliate. That would be a reversal from his previous position, which had called on the electronics firm to come with ideas to take care of such problems as soon as possible.
It appears that the change in the FSC policies came in the wake of the financial market’s reaction against financial authorities’ urgent demand that it should relax its policies somewhat. The FSC policies have been focused on overly-concentrated funds in an affiliate to ease risks.
Choi emphasized in a luncheon meeting with reporters in Seoul on that Samsung Life Insurance does not have a deadline to submit a plan to sell off its stake in Samsung Electronics, adding, however, that the FSC cannot keep waiting endlessly .
“Samsung Life’s stake in Samsung Electronics has no problem now in terms of its value, but nobody knows when there will be an impact on the value of the stake,” Choi said ” The core of the issue is that Samsung Life's stake in Samsung Electronics poses a lopsided asset risk to the life insurer.”
“Shares account for 14% of Samsung Life’s total assets but this ratio is a meree 0.7% for other life insurers,” chairman Choi added.
“This means that Samsung Life will receive a shock from a change in stock prices which is 20 times stronger than the one for other life insurers.”
Samsung Life holds an 8.27% stake in Samsung Electronics at the moment. The stake is worth around 27 trillion won.
“What we are paying attention to is whether or not Samsung Life Insurance will secure financial stability,” chairman Choi said. “As there is concern over the management right to the company, it is right for Samsung Life that knows current situations best to find a way on its own.”
“Samsung Life's combined share in Samsung Electronics and Samsung Fire is expected to go over 10 percent by the end of this year after measures by Samsung Electronics to boost shareholders' value,” said one Samsung official, adding Samsung's next plan to hand over the additions to Samsung C&T, the second largest stakeholder in Samsung Life, is expected to be put on hold due to the latest requests by the FSC. The head of the country's top anti-trust regulator, Kim Sang-jo, said the agency expects “lots of changes” in Samsung's governance structure.
The fair trade commission chief Kim said he's been satisfied to see announcements by Hyundai Motor Group, Korea's No. 2 conglomerate controlled by the Chung families, of which the conglomerate pledged to streamline its ownership structure.

A view of the entrance of the building in Seocho-dong Seoul where Samsung Life Insurance Co. has offices. (Photo: Samsung Life)