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Shinhan Financial Group may raise capital of brokerage unit

ShinhanFinancial Group Co. Ltd. may increase the equity capital of itsbrokerage unit to obtain a license necessary to conduct comprehensiveinvestment banking services.

The group's board will meet the week of July 18 and couldapprove a plan to inject capital into Shinhan Investment Corp.

"The Shinhan group deeply understands the necessity ofraising the capital size of the unit," a representative from ShinhanFinancial told S&P Global Market Intelligence, confirming local mediareports.

Shinhan Financial is expected to raise the wholly ownedunit's capital by up to 500 billion won, TheChosun Ilbo reported, though the spokesman said the details of such ascheme cannot be confirmed until the results of the meeting are disclosed.

According to a revised South Korean capital marketslaw, only brokeragehouses that have more than 3 trillion won of total capital are allowed to actas prime brokerages. Shinhan Investment's total equity was 2.476 trillion wonas of March 31.

As its peers have actively to acquire and merge with otherplayers in the local market as part of efforts to enlarge their book size,Shinhan Financial may feel it is under pressure to strengthen its brokeragebusiness to refrain from falling behind its bigger rivals.

As of July 14, US$1was equivalent to 1,133.46 SouthKorean won.