New NH brokerage arm CEO to bolster investment banking biz

The new chief executive of NH Investment & Securities said in a press conference Friday that he would bolster the securities firm’s investment banking division, in a move to maintain growth that began to take shape in the past few years on the back of business diversification.

Jeong Young-chae, who took office as CEO of NH Investment & Securities on Thursday, revealed that the firm plans to reap 190 billion won ($175.6 million) in net profit this year solely from its IB business, and to increase the profit to 300 billion won in two years.

IB refers to a financial firm’s business to help a firm raise or secure capital through securities issuance, initial public offerings, mergers and acquisitions.

He envisaged the securities firm would become a “regional player” in Asia’s IB business, by fostering IB opportunities in Asian countries like Vietnam and Indonesia.

“The IB business division will play a central role in gaining profit from the outside,” he said. 

Jeong also said strengthening the IB sector is a global trend, citing the case that US investment bank Goldman Sachs CEO Lloyd Blankfein earlier in March passed the torch to David Solomin, who served as head of its IB division.

“In a financial firm, a division dealing with mergers and acquisitions and other IB business will hold sway in its decision-making process, instead of one dealing with a market investment,” Jeong said, so that a firm can maintain its pursuit of deleveraging and fiscal soundness.

But maintaining NH Investment & Securities as an “all-rounder” platform is also a key to continuity in the firm’s upward trend, Jeong said, so that the platform can strike a balance between divisions for wealth management, FICC -- fixed income, currency and commodities -- among others.

Over the course of a three-decades-long career in securities firms, Jeong spent nearly half of the time as head of an investment banking business division in NH Investment & Securities, formerly known as a Woori Investment & Securities. Previously, he worked at Daewoo Securities, a precursor of Mirae Asset Daewoo, also devoting three years to the IB business.

“Strengthening IB business corresponds best with my core capabilities,” Jeong said.

NH Investment & Securities is the nation’s second-largest securities firm with 4.8 trillion won in net worth, following Mirae Asset Daewoo. It is a brokerage unit of Nonghyup Financial Group, wholly owned by Korean farmers’ co-op National Agricultural Cooperative Federation.

When asked about the business license denial of state-sponsored short-term corporate financing, Jeong said the corporate financing business is a channel for capital increase with lower risk, but at the same time stressed the need to take a wait-and-see approach, amid its low return-on-equity at around 7 percent.

Despite meeting the minimum capital requirement, NH Investment & Securities has been through an eligibility screening of its holding structure by the Financial Supervisory Service. Of all five securities firms with over 4 trillion won in net asset value, Korea Investment & Securities was the only company that was given permission to issue a short-term promissory note, as large as twice that of its asset value, to corporates.

By Son Ji-hyoung (consnow@heraldcorp.com)