Nice Credit Rating "Lime Incident Negatively Impacts Credit Ratings of Major Securities Firms"

[Asia Economy Reporter Park Jihwan] NICE Credit Rating on the 17th evaluated that Lime Asset Management's suspension of redemption of private equity funds and large-scale investment loss incident could increase the business risk of major domestic securities firms and negatively affect their credit ratings.

In a report published on the same day, NICE Credit Rating stated, "This incident is a negative factor for the business risk of major securities firms that are striving to strengthen their investment banking (IB) and asset management divisions," and added, "In particular, the scale of compensation due to incomplete sales will also negatively impact profitability."

It also added, "If incidents that lower the trustworthiness of securities firms are repeated and their reputation deteriorates, even if they currently show high profitability, business risk may increase in the medium term."

On the other hand, it expected that the impact on banks' credit ratings would be small.

NICE Credit Rating stated, "Considering the annual profit generation capacity and capital size of banks, the contingent losses related to Lime Asset Management are expected to have a limited direct impact on the credit ratings of banks."