이 기사는 2020년 01월 22일 08:00 더벨 유료페이지에 표출된 기사입니다.
South Korea’s state-run Industrial Bank of Korea (IBK) has decided to expand its alternative bets in the overseas markets to enhance its investment banking (IB) capacity and improve its capital adequacy.
According to financial services industry on January 16, IBK has decided to diversify its business portfolio this year via alternative investment in line with IBK’s new chief executive officer (CEO) Yoon Jong-won’s growth plan. The bank plans to create synergies in collaboration with its affiliates including brokerage, capital, asset management and pension insurance on overseas real estate investment and project financing.
IBK built conservative risk management policies in October of 2019 to manage its capital adequacy. The lender has especially concentrated on managing Common Equity Tier 1 (CET1). “With economic growth slowing down, we have set the business strategy which focuses on improving quality of assets while reducing risk-weighted assets,” said an IBK official.
IBK has maintained its CET1 level of 10 percent since last year thanks to South Korean banks’ adoption of new global rules on management and supervision of interest rate risk.
Still, the lender’s CET1 level is lower than other domestic banks. IBK has expanded its capital through the issuance of contingent convertible bond (CoCo bond) and increased reserves, but more has to be done. Accordingly, the lender planned to enhance its capital adequacy by minimizing its risk-weighted assets.
However, the bank's new CEO recently requested to rebuild its business strategy to enhance the bank's profitability. “Yoon is mapping out the business strategy based on growth, so we are seeking ways such as expanding overseas alternative investments or reinforcing personnel for infrastructure investment,” said the official.
The bank carried out reorganization in 2017 to build its IB-focused business strategy. To enhance its IB capacity, the lender’s IB Group was reorganized into a Corporate Investment Banking (CIB) Group, expanding corporate financing. The headcount of the group has increased to around 180.
The state-run bank has expanded its overseas networks. The lender currently operates 58 retail and commercial branches across 12 countries, including China and Indonesia. The bank has expanded networks into the market where Korean small and medium-sized enterprises (SMEs) actively run their businesses.
IBK's affiliates have prepared to strengthen its IB business, as well. IBK Securities has built track records by participating in overseas real estate investment deal. IBK Asset Management established its alternative investment department and set up its business portfolio that consists mainly of short-term fund and private equity funds. As a result, money market fund (MMF) and PEF account for around 80 percent of its total asset under management (13 trillion won).
(By reporter Sohn Hyun-ji)