Samsung Securities Wins Approval to Enter Note Issuance, Poised to Draw Idle Cash From Wealthy Clients

FSC Approves License at Regular Meeting

Competition in Note-Issuance Market Set for Reshuffle

Samsung Securities has won approval to enter South Korea’s note-issuance business, nine years after first applying. The license had been a long-sought goal since the firm was designated a large investment bank in 2017, but legal risks tied to its largest shareholder and sanctions over internal controls repeatedly blocked its entry. With Samsung Securities joining, the competitive landscape in the note-issuance market, which has grown to about $41.1 billion, stands to be redrawn.

South Korea’s Financial Services Commission approved Samsung Securities’ short-term financing license at a regular meeting on September 9. That raises the number of domestic note issuers to eight, after Korea Investment & Securities, Mirae Asset Securities, NH Investment & Securities, KB Securities, Kiwoom Securities, Hana Securities and Shinhan Investment Corp.

Issued notes are financial products with maturities of less than one year that large investment banks with at least about $2.9 billion in equity capital can sell on their own credit. Securities firms can use funds raised from customers to generate returns through corporate finance, bonds, loans and other investment assets.

The business is regarded as a core operation for large investment banks because it provides a stable source of large-scale funding. The structure is similar to banks taking deposits and making loans. Securities firms, however, can raise as much as 200% of their equity capital, giving larger firms more room to deploy the model. In the current market, major houses including Korea Investment, KB, Mirae Asset and NH rank first through fourth by outstanding balances.

Samsung Securities first applied for the license in 2017, but questions over the eligibility of its largest shareholder blocked its entry. The company tried again last year, only to be slowed by the possibility of sanctions over whether wealth-management hub branches had engaged in improper sales practices. The final hurdle disappeared in July when the FSC set the penalty at an institutional warning, which does not disqualify the firm from approval.

The market has expanded rapidly in the meantime. According to the Financial Supervisory Service, outstanding domestic issued notes climbed to about $39.9 billion at the end of March from about $11.4 billion at the end of 2020, a 3.5-fold increase in five years. Data compiled by the Korea Financial Investment Association showed the balance had reached about $41.0 billion at the end of June. Funds have flowed in because yields are relatively high. One-year contract-type issued notes at major securities firms offer annual interest rates in the upper-3% range, while some special offers reach the mid-4% range. Demand for parking short-term cash has remained steady because the products can offer better returns than bank time deposits without requiring complicated preferential conditions, even though they are not protected by deposit insurance.

Samsung Securities’ biggest strength is its wealth-management franchise for affluent clients. Its retail assets stood at about $478.5 billion at the end of the second quarter, while the number of high-net-worth clients with at least about $73,000 in assets reached 572,000. How much waiting cash from that client base it can pull into issued notes will determine its early performance. The firm may also compete with existing note issuers and bank deposits through special products aimed at new and corporate clients.

Samsung Securities set up a dedicated issued-notes business division in November 2025 and prepared its systems and product development. “We will offer customers a wider range of choices and also contribute to the supply of venture capital in Korea,” the company said.

Bin Nan-sae, Hankyung.com reporter binthere@hankyung.com