Iron hand in velvet glove
When Ryu Sang-ho was appointed chief executive officer at Korea Investment & Securities in March 2007 at the age of 47, he was the youngest among the heads of Korea’s major brokerage houses.
On June 8 this year, when the board decided to keep him in the position, he became the longest-serving CEO of a major securities firm.
For the high achiever, his answer to what he would like to be known for is rather simple ― a CEO that made employees happy.
“If someone writes on my gravestone, I wish the inscription to be ‘We were happy because you were there,’” Ryu said.
He is, in many ways, not a conventional Korean leader in the cut-throat securities sector.
The soft-spoken CEO provides comprehensive and candid answers to questions and does not beat around the bush. Note that one of his post-retirement plans is to write a book on travelling. He is a descendant of Yu Seong-ryong, a prominent scholar during the Joseon Dynasty in the 1500s.
His mobile phone number is on his business card because he believes a CEO should be, after all, a reachable figure.
Not only in the office but also at home, his reputation is well regarded as a family man who enjoys cooking.
Ryu and Korea Investment share similar attributes. The brokerage house is somewhat low-key. It hasn’t been involved in big scandals and its products rarely raise concern in the market for being overly aggressive in pursuit of profit.
Last year the company recorded the highest net profit among Korean securities firms with 220 billion won ― an achievement Ryu attributes to a diversified portfolio, which he is proud to have completed.
Securities firms largely play two roles in the value chain of the industry ― creating and selling products. They formulate derivatives, help businesses go public and sell the products through branches at home and abroad while the research unit connects the two processes.
“A company cannot grow well if it’s strong in only some parts of the value chain,” Ryu said.
“As we did evenly well in the main businesses, we made a good profit from fees in proportion to cost. It’s a structure that generates profit even though we do not take huge risks.”
Jeong Gil-won, an analyst at Daewoo Securities, agrees with this in his latest report, in which he states, “Among major securities firms, the company is the most advanced in diversification of the profit structure that is pivoted on no-risk fees from selling financial products and managing assets.”
The CEO sees a tough third quarter ahead with the slow turnaround of the U.S. economy, the crisis in Europe and the economic slowdown of China, with the in-house research center projecting the benchmark KOSPI to move between 1,750 and 2,200 in the second half. Korea Investment vowed to continue expanding “medium risk, medium return” products.
The brokerage houses were, in fact, marketing “market-interests-plus-alpha” products when the rest were rushing to “wrap accounts” ― a sort of aggressive wealth management program that invests in a handful of stellar stocks.
For a major brokerage house, Korea Investment has one hereditary weakness ― or unique aspect.
While other brokerage houses belong to bigger banking groups or conglomerates ― Woori Investment & Securities to Woori Financial Group and HMC Investment Securities to Hyundai Motor Group, Korea Investment is a de-facto independent because it is the center of its holding company, Korea Investment Holdings.
Without strong affiliates, Korea Investment started with nothing.
“Because we had to ‘dive into the bare ground’ all the time, each employee’s competitiveness is the industry’s best,” Ryu said.
In the past, Korea Investment posted the largest profit per employee although this year, the industry leaders in terms of profit per employee were all small brokerage houses including Kiwoom Securities.
His discussion of leadership, concluded under a theme that remained a focal point during the interview ― trust.
“Even if you get hit on the back of your head by employees, if you trust them, in the end they follow you,” he said.