Value context and insight. lkm@koreatimes.co.kr
Shinhan to bolster investment banking business
Cho Yong-byoung
By Lee Kyung-min
By Lee Kyung-min
Shinhan Financial Group will inject 660 billion won ($560 million) into Shinhan Investment, a move to strengthen its brokerage unit as a major global investment bank, the group said Friday.
The amount will help Shinhan Investment meet the 4 trillion won equity capital requirement, a prerequisite to seeking a license from the financial authorities to become a “mega investment bank.”
Only a bank designated as such is allowed to issue a promissory note with the maximum limit of 200 percent of its equity capital.
The unit only had 3.37 trillion won as of 2018.
The group agreed to approve the plan at a board meeting, Friday, with the whole process to be completed in the latter half of 2019.
Of the total, 460 billion won will be drawn from the group's reserves, with the remaining 200 billion won from hybrid bonds to be issued soon.
“The approval will help the firm take the next step to a promissory note business which we issue relying on our reputation in the market,” a Shinhan Financial Group official said.
“Funds drawn through the business will help us with greater profit generation in the coming years. It will also help the group strengthen its non-banking income.”
The approval will enable Shinhan Investment to join leagues with five other mega IBs in the country: KB Securities, Korea Investment & Securities, Mirae Asset Daewoo, NH Investment & Securities and Samsung Securities.
Of the five, only Korea Investment & Securities and NH Investment & Securities are allowed to engage in the promissory note business.
KB's license was approved from the Securities and Futures Commission under the Financial Services Commission.
About a month ago, the firm's CEO Kim Byung-cheol stressed the need to increase equity capital, a move he considered crucial to becoming an innovative financial services provider.
“The promissory note business as part of our forward-looking corporate strategy must be pursued for us to become a global player,” he said during his appointment ceremony in March.
It is also in line with group Chairman Cho Yong-byoung's broader drive to boost the IB business as a sustainable, long-term revenue source.
Under the initiative, called a boosting “matrix” system, Cho plans to merge similar services operated by the group's subsidiaries to streamline corporate structure and remove redundancies, which will in turn help boost efficiency.