In Search of New Markets

Good Morning Shinhan Securities to step up operations in Belarus, China, SE Asia

Good Morning Shinhan Securities Co. has set a strategy to invest in companies in China and southeast Asia that are planning to go public.
President Lee Dong-girl said the company will make new investments in Russia, Belarus and other Eastern European countries and increase its investments in China and southeast Asian countries this year.
He said the company first entered Belarus last year to prepare for its operation in Russia, saying that Belarus maintains a relationship with Russia like that between Hong Kong and China. Many foreign investors go through Hong Kong to invest in China and, similarly, investors enter Russia through Belarus.
Lee said the company will look for opportunities for business tie-ups with local financial institutions and engage in the privatization of state-run companies in Belarus under its strategy for both Russia and Belarus.
He said the company will complete its project to invest $150 million in initial public offerings of companies in China and southeast Asia within January, adding that the company will form private equity funds in alliance with foreign financial institutions to invest in IPOs. He said securities firms will have to find new markets for their survival when the Capital Markets Consolidation Act is enforced from February next year, which explains the reason for a change in Good Morning's operating strategy.
Most securities firms focus on the investment banking business, but Good Morning Shinhan Securities has been trying to find new business areas in newly emerging markets. Its efforts have been paying off lately with the company finding new investment targets in those markets with visible results. Lee has been saying all along that entering foreign countries for business should not mean just signing cooperative agreements with local financial companies.
Last year, the company jumped earnestly into expanding its overseas operations and it successfully expanded its network linking its operations in Hong Kong, Indonesia, Malaysia and Laos, among other countries. In the process, the company made an investment in a bio-diesel project in Laos, invested in stakes in Malaysia and set up a free IPO investment fund in China in the principle investment sector.
As a result, the company earned 100 billion won in net income from those IB projects, up three fold from 2006. The company is back on the right track just two years since Lee took the helm. Many large securities firms have stayed away from the PI sector in emerging markets since it takes longer to see a return on investment.
Lee said he will steer the company toward PI projects if they appear to pay off in five years or less.
The company is a member of the Shinhan Financial Group, which consists of 11 financial companies including Shinhan Bank and Shinhan Life Insurance.
The company has three subsidiaries including Good Morning Shinhan Securities Europe Ltd, Good Morning Shinhan Securities USA, and Good Morning Shinhan Securities Asia, all 100 percent owned.
The group's total assets were 266.2 trillion won as of the end of the third quarter of 2007, with total loans outstanding reaching 143.8 trillion won and total deposits at 115.3 trillion won.
The BIS ratio stood at 12.8 percent for Shinhan Bank, a major affiliate of the company and the nation's second largest commercial bank after Kookmin Bank in terms of assets. The bank's non-performing loan ratio stood at 1.06 percent and the NPL coverage ratio was 178 percent.
The group's net income in the third quarter reached 2.170 trillion won with operating income before provisioning totaling 3.476 trillion won during Q3.
Return on assets reached 1.47 percent and return on equity was 19.11 percent. Net interest margin for Shinhan Bank came to 2.21 percent. Cost/income ratio came in at 43.6 percent. nw

Pres. Lee Dong-girl of Good Morning Shinhan Securities Co.