By Na Jeong-ju
Staff Reporter
Banks and securities firms are making all-out efforts to secure investment banking experts to develop the area into core growth engines in line with the government's steps to spur overseas investment by domestic firms.
They have conducted reshuffles to reinforce investment banking bureaus and hired more staff to deal with securities and real estate investments, project financing and derivatives trading.
Kookmin Bank, the country's largest lender, said Monday it decided to change the name of Hannuri Investment & Securities, which it acquired late last year, to KB Investment & Securities. It is currently looking for new executives for the firm.
The bank recently hired former chief executives of mid-tier securities firms as outside directors. They are Kang Chan-soo, former CEO of Seoul Securities ― the predecessor of Eugene Investment & Securities, and Kim Han, former CEO of Meritz Securities.
``The acquisition of Hannuri will pave the way to strengthen its investment banking business and is necessary to generate new profits through the creation of synergy between its banking and non-banking units,'' a Kookmin official said.
Shinhan Bank plans to triple the number of its investment banking staff to 750 by the end of 2010 and increase the portion of earnings from the business to its total income to 50 percent.
Nonghyup Bank will also set up an investment banking center and double the number of its staff to 270.
The Industrial Bank of Korea recently signed contracts with investment bankers and set up bureaus that will support their work. It plans to increase the number of the staff at its investment banking department from the current 63 to 120.
The Korea Development Bank is also considering a performance-based wage system for all officials at higher ranks and its investment banking staff. Due to its status as a state-owned bank, it needs approval from the government to realize the idea, but it is necessary to attract more competent investment bankers from the outside, according to KDB officials.
``The growth pace of investment banking business here has become faster, as banks raise their stakes on investments into stocks, bonds and merger and acquisition deals,'' said Kim Woo-jin, a researcher at the Korea Institute of Finance. ``Financial firms are competing to attract more experts to handle their global businesses, but most of them lack the staff.''
Kookmin, Shinhan and other major banks saw their earnings from investment banking grow more than 20 percent in 2007. The outlook for the business is positive considering their plans to explore more overseas markets, while their loan businesses on the local market are reeling because of the government's strict regulations, analysts say.
As Korean banks gear up their efforts to enlarge their share in emerging global markets, they are expected to strengthen ties with global investment banks, analysts say.
``Late last year, we hired investment banking experts in expectations that demand for the business will grow rapidly here in the coming years,'' a Woori executive said. ``Banks are expanding into the market as part of efforts to diversify income sources. The competition will become fiercer.''