Korea Investment
& Securities CEO
Ryu Sang-ho |
Charismatic CEO Strives to Build Global Competitiveness
By Kim Tae-gyu
Staff Reporter
Companies that recover fast from the economic recessions are really strong ones ― if this time-honored belief is true, Korea Investment & Securities could be one of the most robust brokerage houses here.
As far as profitability is concerned, Korea Investment stands out here as the firm netted 69.4 billion won during the July-September period of this year, the biggest in the local equities industry.
The Seoul-based outfit also jacked up its own capital by the biggest margin of 225.1 billion won during the second quarter of the fiscal year 2009 to 2.1 trillion won as of the end of September.
``During the second quarter, stock transactions were reduced by 7 percent from the previous quarter and this explains why major brokerages lost around 30 percent of their profits,'' Korea Investment CEO Ryu Sang-ho said.
``However, Korea Investment maintained its net profits almost flat during the first two quarters of this year. We believe that the consistent performances demonstrate the health of our business portfolio,'' he said.
Indeed, a majority of competitors suffered jitters in their bottom lines over the second quarter.
Samsung Securities suffered from a 27.8-percent drop in net profits while Daewoo Securities and Shinhan Investment Corp. faced 45.1-percent and 55.3-percent dips, respectively.
``We diversified our business portfolio to investment banking services and a variety of financial products rather than depending solely on the traditional revenue streams from equities transactions,'' Ryu said.
Over the second quarter, the stock transactions and associated consulting division accounted for merely 41 percent of Korea Investment sales while the proportions were upside of 50 percent for other players such as Samsung, Daewoo and Shinhan.
Up to 36 percent of the firm's quarterly revenues came from investment banking services while the remaining 23 percent were chalked up in other financial products.
IB-AM Model
Shown above is the head office of Korea Investment & Securities located in Yeouido, Seoul. |
The establishment of such well-diversified business horizons was spearheaded by Ryu himself, who has stressed the significance of alternative cash cows rather than stock transaction commissions.
``Currently, there are almost no barriers in the financial sector and large multinational financial institutions are entering the domestic market because the era of borderless competition has arrived,'' Ryu said.
``As a result, there is an acute need for our company to develop a competitive edge in the financial market by developing innovative products and offering differentiated financial services to meet the needs of our customers,'' the 49-year-old said.
Under the stewardship of Ryu, Korea investment has set up the so-called investment bank-asset management (IB-AM) model of making a full-fledged foray into the two lucrative segments.
``The IB-AM model is a strategic goal aimed at nurturing new growth engines in the investment banking or asset management. It has started to work,'' Ryu said.
In terms of profits from operation of its own assets, the major criterion of measuring capacity of brokerages, Korea Investment racked up 19.5 billion won in the second quarter, the biggest in the business. This compares to 25.1 billion won in deficit for Samsung and 5.4 billion won deficit for Daewoo.
In addition, Korea Investment stayed atop in four investment banking areas over the first six months of fiscal year 2009 ― initial public offerings, corporate bonds, equity linked warrant and real estate financing.
During the half-year span, a total of 10 corporations have carried out public offerings or capital increases with Korea Investment underwriting the processes.
Suprema, a global leader in the promising fingerprint-recognition industry based in Bundang, just south of Seoul, is one of the 10 outfits.
``We increased our capital in September by 43.4 billion won together with Korea Investment. Actually, our initial public offering last year was also underwritten by the company,'' Suprema CEO Lee Jae-won said.
``When it comes to the floating of stocks or raising capital, we learned Korea Investment stays ahead of the pack. That's why we asked for the company to take charge of our business,'' he said.
Representative Financial Player in Asia
Many Korean securities companies have been stuck within the national border. But Korea Investment has turned its eyes to overseas markets with the goal of becoming a representative financial player in Asia.
The first-phase target is to make its presence felt in Asian markets such as Vietnam, China and the Middle East. In particular, the outfit has focused on Vietnam.
``When I first visited Vietnam in late 2000, I saw exponential potential there. From then, we prepared for around five years in order to wade into the markets and started business in 2005,'' Ryu recollected.
The Vietnamese ventures accelerated after the installment of an office at Ho Chi Minh City, the second-largest city located at the southern part of the country.
Since then, Korea Investment has run a total of seven funds amounting to 920 billion won, which invested in natural resource developments or property markets. To play a bigger role in the bourse of the emerging countries, the company hopes to take over a Vietnamese brokerage house next year.
Korea Investment is also making inroads into China by setting up a consultancy in Beijing, the capital of the world's most populous country, by the end of this year.
On a more positive note, its sister company Korea Investment Trust Management acquired a quota from the Chinese government, which allows it to advanced into the Chinese capital markets.
Also on the radar screen of Korea Investment is oil money as it now embraces the Islamic financing. Toward that end, it employed an expert in the principles of Islamic law, called Sharia, in April 2008.
``In the short run, we will strive to make a splash in the Asian markets based on our research capacity and marketing know-how to become top investment bank in Asia,'' Ryu said.
``To evolve into a representative financial player in Asia, we aim to achieve our long-term goal of knocking on the doors of the European markets. Along the line, we will build up the Financial Silk Road interconnecting Asia and Europe,'' he said.
Figure-wise, Ryu said he would catapult the company to become one of the top five Asian investment banks by 2014 by achieving customer deposits of 100 trillion won and profits of 1 trillion won before taxes.
Ryu hopes to double the numbers to 200 trillion won and 2 trillion won by 2020.
Legendary James
The idea of constructing the Financial Silk Road or becoming top Asian player might sound overly ambitious. But Ryu has accomplished exploits, seemingly impossible missions, several times, thus silencing naysayers once and for all.
In particular, he gained a prominence as best salesman in the mid-1990s when he worked in London at Daewoo Securities.
One day he accounted for up to 5 percent of the transactions of Korea-related stocks in London, an unprecedented record that no other salesperson has ever approached thereafter.
This earned him a moniker of ``Legendary James,'' after his English name.
The Legendary James took charge of Korea Investment in early 2007 at the age of 47 as the youngest-ever chief executive in major brokerage houses of Asia's fourth-largest economy.
But his leadership style is far from autocratic, which happens more often than not for entrepreneurs who gain early successes.
``He attempts to hear broadly before making any decision. He actually delegates big parts of authorities to the employees so that they can make decision on their own,'' a company insider said.
``His leadership style appears to be located somewhere between democratic and charismatic ones. Another feature of the boss is that he is people-oriented,'' she said.
voc200@koreatimes.co.kr
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