Hyundai Securities'Policy Shifts
from Saving to Investment

Envisages becoming Global Investment Bank

Banks, securities and other financial institutions are increasingly turning to investment banking, an untapped business area in Korea, which is expected to be crucial for their survival in time with the upcoming deregulation of the domestic financial market.
Investment banking is emerging as a new market as the Korean parliament is more likely to soon approval a bill on the proposed Capital Consolidation Act that would take effect in the second half of 2008.
A case in point is Hyundai Securities, which strives to build up a competitive edge in investment banking ahead of the entry into force of the projected act.
Chang Seung-chul, managing director of Investment Banking Division at Hyundai Securities, said, "Last July, Hyundai Securities has carried out a reorganization, calling for inaugurating PI Division, strengthening IB Division and making derivative product department an independent one. Hyundai Securities President-CEO Kim Ji-wan launched a series of tours in foreign countries, including the United States, Japan, Europe and Hong Kong to meet and exchange views with chairmen of global houses from early last year.
"Hyundai Securities has fully prepared with diverse options under consideration early last year as other companies do. We have embarked on IB projects in earnest late last year and we have to keep on investments for survival as is the case with the semiconductor industry,"Managing Director Chang said.
Hyundai Securities has invested 124 billion won in the project financing sector for the past six months. Among the major project financing investments Hyundai Securities made during 2006 were Hyundai's joint real estate project worth 550 billion won with six financing institutions in Sangin Village in Singal, Gyeonggi Province and a 24 billion won ski dome project in Busan as well as the first of the 11-stage 2.6 trillion won Apple Town project in Kazakhstan being built by Woolim Construction Co.
?yundai Securities plans to invest 300 billion won in the project financing sector on a balanced basis with a retrieval period of six to eight months,"he said. The securities company plans to make project financing invests at a ratio of 7:3 with a focus on the domestic market. On the overseas front, Hyundai Securities is turning to investments in five Asian emerging markets as Kazakstan, Mongolia, Cambodia and the Philippines while domestic project financing investments only in the Seoul metropolitan area and Masan, Chang said. Hyundai Securities has already entered the project financing market with active investments, including the Buy & Lease Back Marine Tower deal with Siemens in Sanghai, reached last year.
Hyundai Securities has become the first Asian company to participate in asset-backed securitization of the Chinese non-performing loan market with the nominal amounts of $200 million being managed by Morgan Stanley and JP Morgan.
Chang said the Investment Banking Division is divided into six business areas, including the traditional IB areas -- IPO, corporate financing and retirement funds. The other three are M&As, project financing and structure financing, the IB areas that emerge as the so-called "Blue Ocean"due to profit-making.
In the M&As arena, Hyundai Securities, together with H&Q, operates a 300 billion private kit fund they have landed from National Pension Service. Hyundai and an undisclosed American fund have also purchased two M&A funds, each worth 200 billion won.
Chang said Hyundai Securities is the industry's leader in terms of money availability and manpower development. "Almost all of Hyundai Securities staff has an experience to study overseas once or more on a short- or long-term course. So far 19 staff members have been dispatched overseas to study on Master of Business Administration (MBA) or Advanced Management Program (AMP) courses. For an example, in 2005, five employees were sent abroad for diverse short-term study programs. Even primary and secondary school students of Hyundai Securities employees are offered short-term study tours to Japan and China free of charge.
A graduate of Korea University, Chang has assumed such international business jobs as his stints at overseas branches for 12 years out of his 20-year career at the securities company.
Hyundai Securities gained a global attention as the company introduced a product called "Buy Korea"which played a pivotal role to revive the nation's sagging financial market after the 1997-98 Asian financial crisis. The securities company has raked in some 200 to 300 billion won in the black after undergoing a period of setback and retrenchment.
The IMF's bailout of Korea has served as an opportunity to learn the bitter lesson on the financial market, he said.
Managing Director Chang said that he personally thinks that the soc-called Korea Discount is attributable more to a lack of governance rather than external factors like North Korea's nuclear ambitions. nw

Chang Seung-chul, managing director of Investment Banking Division at Hyundai Securities

Hyundai Securities'CMAs Top ￦1 Tln

Achieves the feat in about 8 months after its debut

Hyundai Securities Co. has witnessed the value of cash management accounts (CMAs) it has sold surpassing 1 trillion won.
Hyundai Securities said on Jan. 15 that it has sold 100,000 CMAs worth 1 trillion won, a breathtaking feat the securities company has made in about eight months after it put the product on the market last April 24.
Hyundai Securities officials said the reason the securities company made the remarkable achievement in a short period of time is that Hyundai Securities provide the same convenience as pay transfers and frequent, free deposits and withdrawals as commercial banks do, but it attract many customers who have rushed to Hyundai's CMA accounts with higher interest rates after departing from commercial banks'ordinary deposits.
Hyundai Securities is to offer a more improved CMA services following the feat of surpassing 1 trillion won in CMA sale amounts and 100,000 CMA accounts. nw