Five Securities Firms Have 60 Billion KRW Frozen in Indonesia

Financial Industry 'Big Players' and Funds Tied Up in Unsettled Transactions

[Asia Economy Reporter Park Jihwan] It has been confirmed that domestic securities firms supported margin trading for a major Indonesian business tycoon, resulting in over 60 billion KRW of funds being tied up.

According to data submitted by the Financial Supervisory Service to Jisangwook, a member of the New Conservative Party, the exposure (risk amount) of five domestic securities firms related to Benny Jokrosaputro, chairman of Hanson International and an Indonesian conglomerate, totaled 60.799 billion KRW.

By company, NH Investment & Securities accounted for the largest portion with credit loans and unsettled payments amounting to 51.083 billion KRW. This was followed by Korea Investment & Securities (5.338 billion KRW), Shinhan Financial Investment (3.89 billion KRW), Mirae Asset Daewoo (250 million KRW), and Kiwoom Securities (237 million KRW).

Chairman Benny ranked 43rd on Forbes' 2018 list of Indonesian billionaires. His assets are estimated at 670 million USD (approximately 800 billion KRW).

Benny's liquidity crisis began when the Indonesian Financial Services Authority (OJK) ordered repayment of funds raised through "repo transactions" on October 31 last year. Benny raised funds by pledging stocks as collateral while engaging in real estate development, then purchased real estate under the company’s name. However, the local financial regulator took issue with this transaction method, interpreting that "raising funds from unspecified multiple parties and using them as company funds can only be done by banks," thus judging it to be a violation of banking law.

As a result, the stock prices of Benny and his family-owned companies plummeted rapidly from early November last year, leading to a suspension of stock trading. Local media estimate that investor losses amount to a total of 9.91 trillion rupiah (approximately 863.1 billion KRW).

While conducting repo transactions, Benny used multiple securities firms to manage stock prices by designating his company’s stocks as targets for margin and unsettled trades. In this process, five domestic securities firms found themselves unable to recover funds lent through margin and unsettled trades to Benny and his family.

The securities firms are making every effort to prevent losses by securing Benny’s assets as collateral. They have secured stocks and real estate owned by Benny as collateral and maintain that although it will take time, losses are not yet finalized.

NH Investment & Securities currently holds stock collateral valued at 59.596 billion KRW and is pursuing contracts to additionally receive real estate. The appraisal value of the targeted real estate exceeds 100% of the loan amount. Korea Investment & Securities has also secured stock collateral worth approximately 4.9 billion KRW and land collateral worth about 4.7 billion KRW. Additionally, they are conducting land appraisals in preparation for potential interest and principal repayment failures under debt repayment agreements. So far, the total collateral amount secured by the five Korean securities firms is approximately 80.77 billion KRW.

A Financial Supervisory Service official explained, "We are monitoring the impact of this incident on the repayment status and soundness of receivables at the Indonesian local subsidiaries of domestic securities companies."

This content was produced with the assistance of AI translation services.