Samsung group moves suggest a restructuring

Samsung Life Insurance bought a chunk of Samsung Card from a host of the group’s other finance-related subsidiaries in what analysts see as a signal that Samsung is restructuring itself.

Samsung Life Insurance now holds 34.41 percent of Samsung Card after absorbing 5.81 percent of the card company’s shares from Samsung Electro-Mechanics, Samsung C&T and Samsung Heavy Industries on Friday, Financial Supervisory Service data showed yesterday.

Market analysts think Samsung is trying to create a finance holding firm structure centered on the cash-rich insurance subsidiary.

Samsung has yet to adopt a holding company structure, although Samsung Everland, at the top of a complex web of share cross-holdings, is considered the de facto holding company of the country’s top conglomerate.

A holding company structure, adopted by more than 100 local companies as of last year, is being encouraged by the government as a way of enhancing the transparency of corporate governance. It is also able to improve the efficiency of businesses, but can be costly for companies to comply with the law and obligations of a holding company structure.

It is also problematic for Samsung as the current Fair Trade Act bans a nonfinancial holding company from owning a financial affiliate. Samsung Everland holds 19.34 percent of the shares of Samsung Life Insurance, which holds 7.21 percent of Samsung Electronics.

The Park Geun-hye administration is pushing for an intermediate holding company law that will lift the ban, although the finance affiliate is required to be an intermediate finance holding company when the size of the finance affiliate is substantial.

The adoption of the intermediate holding firm law, analysts say, will enable Samsung to create a holding company structure without forcing Samsung Everland to sell off its stake in Samsung Life Insurance by making Samsung Everland a holding company and Samsung Life Insurance an intermediate holding company.

Samsung stirred speculation about a governance structure change earlier this year with two deals among its four affiliates: the handover of a fashion business from Cheil Industries to Samsung Everland and a merger between Samsung SDS and Samsung SNS.

On Friday, Samsung C&T, which could play a significant role in Samsung’s governance structure change, deepened the speculation by buying 5.09 percent of the shares of Samsung Engineering from Samsung SDI. Now Samsung C&T holds 7.81 percent of the shares of Samsung Engineering, becoming the second-largest shareholder of the building contractor next to Cheil Industries, which holds 13.1 percent of the shares of Samsung Engineering. Samsung C&T had no stakes in Samsung Engineering until July. Over the past six months, it spent 113.05 billion won ($107.4 million) to buy shares of Samsung Engineering.

BY MOON GWANG-LIP [joe@joongang.co.kr]