CEOs Reap Handsome Gains on Share Purchases
By Lee Hyo-sik
Staff Reporter
Nobody wanted to purchase financial shares at the height of the global credit crunch late last year, with corporate values of Kookmin Bank and other commercial lenders crashing like their peers in the U.S. But against slim odds, CEOs of domestic banks bought shares of their own firms to mitigate growing pessimism among investors and customers and show their strong commitment to turning companies around.
In a less than a year, their brave actions have paid off as shares of financial services firms are soaring on the easing of the international financial market jitters and improving economic conditions at home and abroad, making it possible for them to realize huge capital gains from stock investments. The value of their stockholdings will likely go up further, with the banking sector widely expected to post a stronger performance down the road.
According to the financial industry sources Tuesday, Shinhan Financial Group Chairman Ra Eung-chan could have made nearly 245 million won in capital gains from his investment in the holding company stocks Monday if he had sold 25,000 Shinhan shares he purchased at 31,962 won per share late last year. Shinhan shares fell to the 20,000 won range in March but have recently exceeded 40,000 won, closing at 41,800 won Monday.
The chairman also bought 26,052 company shares at 16,800 won under the group's paid-in capital increase scheme, which would have made him 651 million won richer if he disposed of his stakes Monday.
Hana Financial Holdings Chairman Kim Seung-yoo was one of big beneficiaries among bank CEOs by purchasing shares of his own company when the domestic financial sector was hit hard by the global market meltdown. Kim bought 6,000 shares on several occasions from October to December last year for about 20,000 won per share. Given the holdings company stock closed at 34,900 won Monday, Kim would have generated nearly 100 million won in capital gains if he had sold them.
Also, Woori Financial Group Chairman Lee Pal-seung could have made significant gains from the purchase of 8,000 group shares at 7,297 won per share in October last year. The stock closed at 14,250 won, meaning that Lee could have realized 54 million won in capital gains.
KB Financial Group Chairman Hwang Young-key also bought a total of 4,540 KB shares late last year at an average price of 44,169 won, which could make him 43 million won richer.
A local bank official said CEOs bought company shares to show that they were determined to overcome the financial difficulties, adding none of them expected shares to rebound at their current pace. ``With bank shares expected to continue to head upward on the accelerating economic recovery, the size of their capital gains will increase in the future. But they will not dispose of stakes until they leave posts, and given the stock market volatility, we have to wait and see whether they will actually make money from last year's investment,'' he said.