"2023 GIB Group Pre-Tax Profit Expected to Reach 1 Trillion Won"

Relay IB Representative Interview
Jung Geun-su, Head of Shinhan Financial GIB Group
Shinhan Bank Utilizes Corporate Clients... Strengthening ECM and DCM
Expanding Investments in Logistics and Data Centers

Jeong Geun-su, Head of GIB Group, Shinhan Financial Group

The competition among domestic investment banks (IBs) is intensifying. Mega IBs with over 4 trillion KRW in equity capital are increasing their capital and continuously expanding their organizations based on high profitability. The funding weapon called issuance of commercial papers has multiplied their financial power to pursue profitable deals. Small and medium-sized securities firms have also significantly boosted their financial strength by increasing profits in project financing (PF) businesses. With market liquidity pouring into the investment market, the IB market is expected to experience a record boom. We hear from the heads of securities firms' IB divisions about their market outlook and survival strategies.

[Asia Economy Reporters Lim Jeong-su and Park So-yeon] Despite the challenging domestic and international investment environment due to COVID-19 last year, Shinhan Financial Investment achieved remarkable results in major projects such as the Amazon logistics center, hydrogen charging station infrastructure projects, and global acquisition financing. In particular, the logistics center project, where Shinhan Financial Investment directly collaborated with Amazon to design the deal structure, attracted significant market attention amid the COVID-19 situation.

Jung Geun-soo, head of Shinhan Financial Group's GIB (Global Investment Banking) group, said in an interview with Asia Economy on the 8th, "It is possible to achieve a pre-tax profit of 1 trillion KRW for the entire GIB group, including banking, financial investment (securities), insurance, and capital, by 2023," adding, "To this end, we plan to put financial investment at the forefront of the GIB business." Jung, who has extensive experience in Shinhan Bank's investment finance sector, was appointed head of the global IB division overseeing all Shinhan-affiliated financial companies at the end of last year. His confidence comes from the numbers. The GIB group's pre-tax profit doubled from 370 billion KRW in 2018 to 730 billion KRW in 2020 within two years. This year's net profit target for the GIB group is approximately 800 to 820 billion KRW.

To achieve this goal, they plan to actively utilize Shinhan Bank's GIB desks located in major cities worldwide. Shinhan Financial operates GIB desks in five locations?London, New York, Singapore, Australia, and Tokyo?to expand its global business. Jung said, "Since 2017, we have actively discovered local overseas asset managers and participated as LPs (limited partners) in about 20 major asset management firms," adding, "Although bank employees staff the GIB desks, since they belong to the same group GIB organization, we plan to leverage this network for financial investment purposes."

Jung plans to continue new investment attempts. Utilizing the asset management license held by the Hong Kong GIB center, they plan to establish global investment funds. He said, "First, we will create a parent fund with affiliate funds and invest in several local subsidiary funds," adding, "Once we gain know-how, we plan to recruit other domestic investment institutions." Recently, they also started investing in the Indian market. Jung said, "We participated as an LP in an India market fund managed by Baring PE," expressing expectations that "being able to review the investment portfolio will increase our investment experience."

He is currently developing a predictive marketing model based on corporate customer data analysis at Shinhan Bank. This is a special measure to improve competitiveness in the relatively lagging ECM (equity capital market) and DCM (debt capital market) sectors. By analyzing Shinhan Bank's extensive corporate customer network, they plan to predict demand for funding and mergers and acquisitions (M&A) and conduct efficient sales activities.

They have also set a goal to nurture unicorn companies through venture investment. Jung said, "We will avoid investments where we participate as LPs with 1 billion or 2 billion KRW and instead secure controlling stakes by investing at least 10%," adding, "We plan to operate a new investment model that focuses intensive and continuous investments on well-performing companies."

They also plan to utilize the bank's real estate and PE networks. Especially this year, they will actively invest in logistics centers and data centers. Jung said, "We are cooperating with institutions specializing in logistics and data centers and are currently investing in about 2 to 3 projects in Vietnam and 3 to 4 projects domestically." In the infrastructure investment sector, they are focusing their capabilities on the GTX C line project, which is scheduled for bidding next month. Jung said, "We have been preparing for this project for over a year," adding, "We won the GTX A line project and are putting all efforts into succeeding in this project as well."