'Interest Rate Hike Calm Before the Storm' Low-Risk Products Surge... Trust Market Surpasses 1,000 Trillion Won for 2 Consecutive Years

[Asia Economy Reporter Ji Yeon-jin] The domestic trust market has surpassed 1,000 trillion won for the second consecutive year. This is attributed to a large influx of investments into low-risk and interest rate-type trust products amid increased volatility in the asset market due to the prolonged COVID-19 pandemic.

On the 18th, the Financial Supervisory Service announced that as of the end of last year, the total trust assets of 60 trust companies amounted to 1,166.7 trillion won, an increase of 12.3% (127.6 trillion won) compared to the end of the previous year. Although the number of trust companies decreased by one due to the New York Mellon Bank ceasing its trust business in December last year, the total trust assets increased compared to 1,032.3 trillion won held by 61 companies at the end of 2020.

The banks' trust assets increased by only 2.8 trillion won (0.6%) to 495.4 trillion won compared to the previous year, whereas securities companies saw a 23.7% increase (59.6 trillion won) to 310.7 trillion won, and insurance companies recorded 18.2 trillion won, a 1.7% increase.

Monetary trusts reached 586.2 trillion won, up 76.7 trillion won (15.1%) from the end of last year, with specific monetary trusts accounting for 570 trillion won, or 97.2% of the total. This was thanks to an increase of 77.1 trillion won in specific monetary trusts, centered on banks' retirement pension trusts (20.5 trillion won) and securities companies' fixed deposit-type trusts (31.9 trillion won).

Fixed deposit-type trusts are trust products linked to bank deposits and securities company trusts, offering higher yields than bank deposits. Securities companies subscribe to fixed deposit-type trusts (securities company trusts) through trustees (SPCs), and SPCs securitize trust beneficiary rights to issue asset-backed commercial paper (ABCP), enabling them to receive preferential interest rates through large-scale deposit subscriptions.

A Financial Supervisory Service official explained, "There has been an increase in demand for fixed deposits in preparation for the lifting of liquidity coverage ratio (LCR) and loan-to-deposit ratio regulations in the banking sector, and a concentration on low-risk and interest rate-type trust products due to increased demand from institutional and corporate investors for standby safe asset management amid stock price declines and interest rate hikes."

Property trusts reached 579.9 trillion won, an increase of 50.6 trillion won (9.6%) compared to the end of the previous year, with notable growth in collateral trusts (48 trillion won) and managed land trusts (15 trillion won).

By sector, banks held a 42.5% share, down 4.9 percentage points, real estate trust companies increased by 2.6 percentage points to 29.3%, securities companies 26.6% (up 2.4 percentage points), and insurance companies 1.6% (down 0.1 percentage points), in that order.

Last year, total trust fees amounted to 2.2282 trillion won, an increase of 280.6 billion won (14.4%) from the previous year. This was due to increased fees from banks' retirement pension trusts (44.7 billion won) and equity-linked trusts (43.4 billion won), securities companies' retirement pension trusts (13.6 billion won) and equity trusts (19.8 billion won). Additionally, real estate trust companies saw an increase of 110.3 billion won in fees from managed land trusts.

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