Hana Financial Investment, "Heading to Become the 6th Mega IB"

CEO Jin-guk Lee Completes 500 Billion KRW Paid-in Capital Increase in March and Applies for Designation as Mega IB

Jin-guk Lee, CEO of Hana Financial Investment

[Asia Economy Reporter Eunmo Koo] Hana Financial Investment, under the leadership of CEO Jin-guk Lee, has prepared to join the ranks of ultra-large investment banks (IBs) as the sixth domestic securities firm by expanding its capital to the 4 trillion KRW level through a 500 billion KRW rights offering.

On the 4th, Hana Financial Group announced that its subsidiary, Hana Financial Investment, will proceed with a rights offering to raise approximately 499.7 billion KRW in operating funds. Hana Financial Group will acquire 8.47 million shares issued through this offering, with the scheduled acquisition date set for the 26th of next month.

Once this offering is completed, Hana Financial Investment's equity capital will increase from 3.4751 trillion KRW as of the end of last year to about 4 trillion KRW, meeting the ultra-large IB licensing requirement of 4 trillion KRW in equity capital. A Hana Financial Investment official stated, "The payment for the capital increase is scheduled for March 26, and when the first quarter net profit of this year is reflected, we expect the equity capital to exceed 4 trillion KRW by the end of the first quarter." There are currently no plans for additional capital expansion.

CEO Lee evaluated that since the conditions to secure ultra-large IB status have been established through this capital increase, the raised funds will act as a driving force to accelerate future growth.

He said on the day, "Through this capital increase, we have secured the status of an ultra-large IB and shifted the core of our business model from brokerage to IB and sales and trading (S&T), laying the foundation to compete seriously with the 'Big 5' securities firms. With the expanded capital, we plan to strengthen the competitiveness of existing IB and S&T operations, expand overseas earnings by entering global emerging markets, and enhance group collaboration to achieve competitiveness on par with other ultra-large IBs."

CEO Lee added, "Entering the ultra-large IB category will establish a foundation to accelerate profit growth through business expansion, improve risk indicators by meeting strengthened regulatory ratios, and based on this, we will focus on expanding IB and S&T while also solidifying our retail business."

He further stated, "Through continuous digital innovation, we will transform into a digital financial investment company, further expand our customer base, improve employees' work process efficiency, and prioritize collaboration among group affiliates. By maximizing the strengths of each affiliate, we will strengthen cooperation strategies such as joint participation in affiliate IB businesses and affiliate complex branches to maximize the group's profits."

With the increased scale from this rights offering, the pace of Hana Financial Investment's entry into the ultra-large IB category is expected to accelerate. Hana Financial Investment plans to complete the rights offering within next month and, once equity capital exceeds 4 trillion KRW, apply to financial authorities for designation as an ultra-large IB.

Considering that Shinhan Financial Investment, which surpassed 4 trillion KRW in equity capital last year, is unlikely to receive approval easily from the Financial Services Commission due to issues such as the Lime Asset Management scandal, the possibility of Hana Financial Investment securing the sixth ultra-large IB position is increasing. However, CEO Lee emphasized, "Who becomes first is not important. We will focus on thorough preparation to be designated as an ultra-large IB." Since the system was introduced in 2016, five securities firms have been licensed as ultra-large IBs by financial authorities: Mirae Asset Daewoo, NH Investment & Securities, Korea Investment & Securities, Samsung Securities, and KB Securities.

If Hana Financial Investment is designated as an ultra-large IB, it will also be able to engage in short-term finance business such as issuing commercial papers. Ultra-large IB comprehensive financial investment business operators can issue commercial papers with maturities within one year up to 200% of their equity capital upon approval from the Financial Services Commission. A Hana Financial Investment official stated, "Regarding new business applications such as short-term finance business that can raise funds up to twice the equity capital, we plan to coordinate the application timing considering the securing of related organizations and personnel."

This content was produced with the assistance of AI translation services.