Korea Postal service wants stocks

Korea Post, the nations government run postal service, wants to be allowed to invest 5.5 trillion won ($4.8 billion) in Koreas stock markets beginning next year. The post office and its affiliated savings and insurance programs have total assets of about 50 trillion won. The agency said it expected no major opposition to the plan in the Assembly, which must approve it, and has gained the assent of other ministries for the proposal.
Until now, the postal agency has been allowed to buy stocks issued by the government or those of companies at least 50% owned by the government.
Korea Post may also be allowed to use electronic signatures in transactions, putting it at the same level as commercial banks in online services.
Korea Post said that it would send the proposal to the Assembly this month.
The post office wants to put up to 5% of its total deposit base of about 30 trillion won into stocks; commercial banks here generally have about 2% of assets in the stock market. It also wants to allocate a sum equal to 20% of its total outstanding insurance policies to stocks. Combining those amounts would give a total of 5.5 trillion won to be put into the equities market.
The draft bill would also allow the post office to purchase directly corporate bonds and other financial products; those investments plus stock investments, under the draft bills provisions, could amount to 40 percent of the agencys total assets.
The post office now uses only personal seals and signatures to verify a customers identity. The provision for electronic signatures would allow online banking.
Korea Post, which runs 2,800 post offices nationwide, said that the new proposals, if passed, would be helpful in attracting more deposits by allowing the institution to broaden its financial base. The lifting of restrictions on equity investments would also put some new life in the stock market, analysts said.

I believe we will see faster growth in our deposits than commercial banks if we provide Internet banking services and operate with a wider investment portfolio, said Kim Hong-seo, an official at the financial business bureau of Korea Post.

Korea Post has a competitive edge in having more outlets in provinces than banks do, and the government backs the entire deposit of customers, said Lee Byeong-yun of the Financial Supervisory Service. But Korea Post could deal a blow to small local financial institutions. Also, investments in financial products and stocks must be monitored closely.