IB experts take helm of securities firms
By Lee Kyung-min
NH Investment & Securities Jeong Young-chae
A growing number of local securities companies have appointed investment banking (IB) experts as CEOs in a bid to revamp their business models and diversify revenue sources.
Amid falling fee income, the brokerage houses feel a sense of urgency in strengthening their IB capabilities and developing it as the next growth engine for long-term profit.
They are: Mirae Asset Daewoo President Kim Sang-tae, NH Investment & Securities CEO Jeong Young-chae and Korea Investment & Securities CEO Jung Il-mun. Jung has yet to take office as his appointment is awaiting approval of the company board.
Jung will succeed Yoo Sang-ho who stepped down in November concluding his 12 successful years as Korea's longest-serving securities firm CEO.
Korea Investment & Securities said the appointment of Jung comes at an opportune moment for the firm to brace for the change after it posted record operating profit of 539.7 billion won ($476 million) in the first three quarters of 2018.
“The new CEO will help the company become stronger by further strengthening the already tightly integrated organizational structure between holding company and the subsidiaries.”
The holding company of the securities firm will convene a board meeting and pass a motion to appoint him soon.
He began working at Dongwon Securities in 1988. He has extensive experience in the IB business, corporate finance pension management. He has been vice CEO since 2016.
Mirae Asset Daewoo President Kim Sang-tae
NH Investment & Securities Jeong Young-chae is the youngest CEO to have been appointed in recognition of his 14 years of experience as the IB department head and the resulting achievement in helping the firm become an industry leader.
The firm said employees' morale was further boosted following the appointment of Jeong as his colleagues have high regard for his competence and professionalism.
“Our firm has topped the list of best performing securities firms in sectors of Initial Public Offering (IPO), capital increase by issuing new stocks, corporate bond issuances, corporate restructuring and merger and acquisitions (M&A), all of which was part of his achievement since he began working at the firm in 2005,” a NH Investment & Securities official said.
“Jeong was deemed the perfect fit for our new business strategy moving toward capital management-derived profit, and less brokerage business.”
The appointments came amid broader efforts for securities firms to enhance IB business to find an alternative for profit amid continued decline in stock trade fees.
Jung Il-mun, CEO nominee for Korea Investment & Securities
Mirae Asset Daewoo set up an IB department while the WM team was upgraded to an independent department.
Similar moves followed at NH Investment & Securities which plans to increase the number of IB departments while expanding IB networks abroad.
Worsening business performance is one of many reasons behind the securities firms' move to seek the ongoing organizational reform.
According to the Financial Supervisory Service released Tuesday, local securities firms suffered a sharp fall in net profits in the third quarter of 2018 due to falling fee income.
Fifty-five brokerage houses posted a combined net profit of 957.8 billion won ($900 million) between July and September, down 23.1 percent or 288.2 billion won from the previous quarter.