South Korea’s Tong Yang Securities has agreed to sell its business for an undisclosed sum to Taiwanese Yuanta Securities after more than six months of negotiations. The change of the company’s majority shareholder is expecting regulatory approval by the Financial Services Commission (FSC).

“The details will need to be laid out by the management in terms of business strategy,” a spokesperson from Tong Yang Securities told SRP. “However, we will resume the issuance of equity-linked securities (ELS) and derivatives-linked securities (DLS) once we see the market has been stabilised and investors regain confidence in our brand.”

On March 13, the management board of Tong Yang agreed to issue new shares at a discount and it will issue a further KRW150bn ($1.4m) worth of preferred shares to Yuanta upon the approval by the FSC. Yuanta Securities will then become the company’s main shareholder with a 53.61% stake in Tong Yang Securities.

“We expect synergies to be driven by Yuanta Securities which is well-known as a strong player in the retail space”, the Tong Yang spokesperson added.

Seo Myung Seok, chief executive officer of Tong Yang Securities, said during a press conference that Yuanta and Tong Yang have agreed not to execute any further reduction in their labour force. He also added that Tong Yang Securities will first work on restoring consumers’ trust in the firm and it will cooperate with Yuanta to make it a leading securities firm across the Asian continent.

Following the Tong Yang crisis, a total of 650 employees left the firm and the number of senior executives has also been halved.

“Our ELS and DLS departments still reside in the firm and we are waiting for the firm to be in a good state before launching any products,” added the spokesperson.

Tong Yang Securities has been one of the strongest market players in South Korea’s retail space, competing head to head with Korea Investment & Securities, Daewoo Securities, Mirae Asset Securities and Woori Investment & Securities.

However, the firm halted its ELS and DLS issuance in October last year. SRP data shows that Yuanta Bank, a subsidiary of Yuanta Group, is an active distributor of structured products in Taiwan and currently has 51 live structures.

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