Value context and insight. lkm@koreatimes.co.kr
Samsung Securities CEO put to test
Samsung Securities CEO Chang Seok-hoon
By Lee Kyung-min
By Lee Kyung-min
The year 2019 is a critical year for Samsung Securities CEO Chang Seok-hoon as his leadership and management capabilities will be put to the test once suspended sales of the scandal-ridden company resume Jan. 27.
He took office in December, 2018, to replace then leader Koo Sung-hoon who resigned to take responsibility for the so-called fat finger scandal that took place in April, 2018.
In the scandal, widely dubbed a “moral hazard,” 16 of the firm's employees sold off 5.01 million shares the firm mistakenly issued. Despite warnings against doing so, they sold off 182 billion won ($162 million) in stocks for windfall gains.
The incident tarnished the credibility and image of the securities arm of Samsung Group dealing a blow to its business performance and shareholders' values.
In the months following the scandal last year, the firm was fined 144 million won and its stock brokerage business was barred from taking new clients for six months.
Eight people involved in the scandal were indicted for embezzlement and fraud. Three of them who were indicted without physical detention were released on bail.
Against this backdrop, the most urgent task for Chang is to rebuild the company's corporate image and restore market credibility by retooling its internal control system to prevent the recurrence of such “amoral” behavior. He is also tasked with improving business performance and stock prices.
Regarding business, the firm is seeking to strengthen coordination between Wealth Management (WM) and Investment Banking (IB) under his leadership, further bolstered by closer cooperation with top-tier global financial service firms.
It plans to share knowledge with them on managing balanced portfolio, followed by introduction of stable, high-yield financial products that could maximize investor satisfaction.
“We plan to expand retail service from the current individual customer to corporate clients. Optimal investment opportunities created by officials in charge of IB and asset management will be offered to clients. This in turn will help us maintain a sustainable future growth engine,” a Samsung Securities official said.
“Fintech-based non face-to-face services via online, mobile platforms will also be strengthened,” he added.
However, the firm will remain challenged in taking the initiative to becoming a major player in the IB sector over the next two years, as the financial authorities-imposed two-year ban on new business expansion will be in place until 2020.
The firm in full awareness of the punitive measure for the scandal withdrew in August 2018 a request seeking an approval to issue its own notes, a key component to IB expansion.
The firm is expected to record only around 33.8 billion won in net income in the fourth quarter in 2018, down 35.8 percent from the previous quarter's 64.2 billion won, according to NH Securities.
But the firm's customer base did not shrink, with its retail asset standing at 17.9 trillion won in the July-September period in 2018, an 8 percent increase from a year earlier. Over 10.8 million clients had at least 100 million won investment with the firm.