FSS Criticizes Insufficient Venture Capital Supply, Will Review Supply Plans in CIBF Screening

by Cho Seulkina

Published 12 Aug.2025 16:00(KST)

The Financial Supervisory Service (FSS) has announced that it will now review detailed supply plans during the designation and approval process for Comprehensive Investment Banking Firms (CIBFs). This measure aims to encourage a more systematic supply of venture capital, as the proportion of venture capital in CIBFs' total assets remains at only about 2%, despite the original intent of the system. Before designating additional CIBFs, the FSS also urged existing CIBFs currently operating promissory note businesses to take on a more active role.

Seo Jaewan, Deputy Governor of the FSS, stated this during a meeting with CIBFs held at the FSS in Yeouido on the afternoon of August 12, 2025. He noted, "Despite the introduction of large-scale investment banks (IBs), CIBFs have so far shown insufficient performance in supplying venture capital." The meeting, convened to discuss measures to revitalize venture capital supply by CIBFs, was attended by executives in charge of fund management from the four CIBFs engaged in promissory note businesses: Korea Investment & Securities, Mirae Asset Securities, NH Investment & Securities, and KB Securities.

At the meeting, Deputy Governor Seo emphasized, "For the 'real growth' of our economy, it is necessary to identify and support promising companies with high growth potential." He added, "This is the fundamental role that CIBFs, as leaders in the financial investment industry, must fulfill by providing comprehensive corporate finance services." He further stated, "To ensure a sustainable supply of venture capital, CIBFs must develop risk management capabilities commensurate with the scale of their venture capital operations," and pledged, "The FSS will actively support efforts to strengthen the venture capital supply capacity of CIBFs and the broader financial investment sector."

The financial authorities previously introduced the CIBF system in August 2013 to foster the emergence of Korea-style investment banks. However, as of the end of September last year, the proportion of venture capital in CIBFs' total assets stood at only 2.23%, amounting to 12.8 trillion won. This highlights the insufficient performance of existing CIBFs in this area.

In particular, the FSS announced its intention to review detailed supply plans during the designation and approval process for CIBFs, in order to promote a more systematic supply of venture capital. Previously, the financial authorities also pushed for a policy requiring CIBFs to allocate 25% of funds raised through promissory notes to domestic venture capital, with a phased expansion planned through 2028.

Industry representatives also expressed their support for the government's policy direction and stated their commitment to focusing their capabilities on supplying venture capital. They mentioned plans to actively provide funding to high-growth-potential companies, such as venture and innovative firms, by utilizing promissory notes and Comprehensive Investment Accounts (IMA). They also outlined concrete plans to strengthen investment capabilities, enhance risk management, and establish a solid foundation for expanding the supply of venture capital.

An FSS official stated, "We plan to actively support CIBFs so that they can faithfully fulfill their core role of supplying venture capital and thereby drive the growth of our economy."

Meanwhile, from the second half of this year, the financial authorities are accepting applications for additional CIBF designations for firms wishing to operate promissory note and IMA businesses. As the designation requirements will be further strengthened starting next year, several securities firms that have been preparing for CIBF designation have reportedly applied for promissory note approval and related licenses. However, it is understood that the FSS previously requested a suspension of the review process due to sanctions and legal risks involving these securities firms. The relevant agenda subcommittee of the Financial Services Commission is scheduled to reconvene at the end of this month.