[Manbo Jeongdam] Hayounggu Blackstone Chairman... Asking the Future in 40 Years of Finance and Investment History

A Witness to 40 Years of Korea's Finance and Investment Industry
14 Years as Global Bank Head at Hanmi Bank and Citibank
Transformed into Chairman of Blackstone Korea, the World's Largest Private Equity Firm
Objective Advice on Korea's Industrial Structure and Finance-Investment Sector

In front of the Jongmyo ticket office in late autumn. After passing through the early spring frost and the midsummer scorching sun, Ha Young-gu, Chairman of Blackstone Korea, who carries the 40-year history of Korean finance and investment, walked through the deeply colored autumn leaves.

He, who starts his day by waking up early and walking around his neighborhood, is still an active figure in his 70s with a brisk pace. Known as the 'bank president by profession' and the 'gentleman of finance,' Chairman Ha has worked as CEO at global financial and investment companies such as Citibank and Blackstone, observing Korea's finance and investment industry with a more objective perspective than anyone else.

After taking his first step at Citibank Seoul branch in 1981 and growing as a banker, he was appointed as the youngest bank president at the age of 48 in 2001 when he became the president of Hanmi Bank. Even after Hanmi Bank was acquired by Citigroup in 2004, he continued to serve as bank president until his retirement in 2014, after which he took on the role of chairman of the Korea Federation of Banks. Since 2019, he has served as an outside director of SK Hynix and was appointed chairman of Blackstone Korea in 2022.

Viewing Korea’s finance, investment, and industry from the perspective of a global financial firm, he may hold the answers needed for our economy, which is experiencing growing pains due to K-value-up and generational changes in corporate groups. We had a long conversation while walking the autumn leaf path starting from Jongmyo, continuing through Seosunra-gil and Yulgok-ro.

Hayounggu, Chairman of Blackstone, is walking on the Yulgok Tunnel upper walkway in Jongno-gu, Seoul on the 5th. Photo by Kang Jin-hyung

Chairman Ha, who enjoys walking exercise regularly, walked with a longer stride and faster pace than the reporters. Until his mid-60s, he enjoyed skiing and snowboarding, but due to the risk of injury, he recently considers walking exercise the best.

"I am a morning person. I wake up at 5:30 a.m. and exercise for more than an hour, preferring walking the most. I aim to walk 8,000 to 10,000 steps a day. I mainly walk along the Han River or around Bongeunsa Temple. In the past, I enjoyed active sports like trekking, golf, skiing, and snowboarding, but recently, due to back problems, I mostly walk or use an indoor bicycle."

Born in 1953 in Gwangyang, Jeonnam, Chairman Ha cited "thorough self-management and a global mindset (international sensibility)" as the secrets to maintaining his career to this day. His positive attitude, such as "trying to sleep with a smiling face," is also indispensable.

He has built an extensive network both domestically and internationally, having served as a foreign bank president for 14 years and as chairman of the Korea Federation of Banks for three years. Chairman Ha is also a hidden contributor to overcoming risks whenever Korea faced crises.

During the 2008 global financial crisis, the Korean government needed to mobilize top U.S. officials to push for a currency swap with the U.S. At that time, Ha Young-gu, then Citibank Korea president, played a role in connecting Robert Rubin, Citigroup advisor and former U.S. Treasury Secretary, with Kang Man-soo, then Minister of Strategy and Finance of Korea.

- You have witnessed the development of Korea’s finance and investment industry for over 40 years.

I joined Citibank in 1981 and went through roles as head of IB, corporate finance, and retail finance before becoming president of Hanmi Bank, the portfolio bank of the Carlyle consortium, in 2001. After three years, Hanmi Bank was sold to Citibank, achieving a successful exit. Kim Byung-joo, who was the Korean representative of Carlyle on the same boat, established MBK, while I returned to Citibank due to the 'key man stay' clause in the Hanmi Bank acquisition conditions. Unlike MBK, I don’t have the knack for making money but have managerial qualities. The most memorable parts of my career are mostly related to financial crises: the foreign exchange crisis, the credit card crisis, and the global financial crisis. I also fondly remember volunteering with Habitat for Humanity every midsummer, building houses with colleagues while sweating together.

Hayounggu, Chairman of Blackstone, is walking in Jongmyo Park, Jongno-gu, Seoul on the 5th. Photo by Jinhyung Kang

- From the perspective of a global financial firm, what are the strengths and weaknesses of Korean finance?

Korean finance, especially banks, established themselves during the development era as industries supporting export and manufacturing sectors. Even now, society holds high standards and expectations for the financial industry. It is expected to contribute to society, support industrial development, and serve financial consumers. It is natural that financial companies must make great efforts to meet these expectations. On the other hand, some adjustment in the perspective on finance is needed. Financial holding companies have developed steadily despite headwinds and have contributed significantly to the nation. Recently, new competitiveness has emerged in the financial sector, such as Mirae Asset Group, Meritz Financial Group, and Kakao Bank. Mirae Asset has succeeded in globalization, especially in asset management. Meritz has shown that finance can attract good talent through compensation systems like general industries and transform into a shareholder-friendly company. Kakao, as you know, has played a pioneering role in the digitalization of the financial industry.

- Recently, the government and companies have been making efforts to value-up K-discounted stocks. What areas should be strengthened?

Value-up was timely. It is a proper national task and an appropriate prescription. We cannot solve all problems at once. I think it is fine to gradually supplement the necessary parts. Japan also invested more than 10 years and is now achieving many results. The important thing is for listed companies to reflect on the purpose of being listed on the stock market. If the price-to-book ratio (PBR) is below 1, there must be the will and practice to overcome it. Companies themselves should improve governance and propose shareholder-friendly measures such as expanding dividends. If a company thinks it is good to be undervalued, it will eventually be abandoned by shareholders. In this regard, it is worth paying attention to financial holding companies centered on banks that have shown remarkable stock price increases after the value-up implementation.

- Most Korean chaebols are transitioning to third- and fourth-generation management. Various side effects occur during this succession process. Korean industry will be led by these chaebol groups for a considerable time. Is there a way to minimize these transitional growing pains and side effects?

There is pain, but it is also a moment of opportunity. Even if not founders, generational changes bring many positive changes. New and emerging industries are being entered, non-core divisions are spun off, and changes in core leadership teams are taking place. It can also be an opportunity for global expansion. This is similar not only for chaebols but also for small and medium-sized enterprises. It should not be viewed negatively. Some companies are seeking partnerships with Blackstone to prepare a new leap and create new value. Requests for spin-offs of non-core businesses have increased. Japan is also undergoing this process, with advanced governance and recent groundbreaking changes underway. During this process, Blackstone acquired Sony Payment Services from the Sony Group.

- Recently, MBK, together with Youngpoong, attempted to acquire management rights of Korea Zinc, showing activist traits rather than the corporate-friendly image typical of large private equity funds, stirring not only the industry and capital markets but also politics. What is your evaluation?

This is an issue with significant impact and ripple effects. It is being watched with interest not only by the direct parties but also by indirect stakeholders and many companies. However, Blackstone places great importance on partnership culture and focuses on building business together.

Hayounggu, Chairman of Blackstone, is walking in Jongmyo Park, Jongno-gu, Seoul on the 5th. Photo by Jinhyung Kang

- Private equity funds (PEFs) have recently entered the retail sector, getting closer to individual financial consumers. Why are PEFs, which used to operate very privately, pursuing more public changes, and what is their future outlook?

The democratization of investment opportunities in alternative products such as private equity funds is a global trend. Among the funding of major global PEFs, individuals account for 15-20%, expected to expand to 30%. Globally, institutional investors are rebalancing alternative investments to 30-33%. Individuals are rebalancing faster but still only invest 1-2% in alternatives. Blackstone started providing private wealth solutions 13 years ago and has moved quickly in this field, currently receiving $2.5 trillion (about 3,500 trillion KRW) from individual investors, about 25% of total assets under management. Individuals are diversifying from the past tendency to allocate bonds and stocks at 60:40 to gradually expanding investment areas to include PE products. Hong Kong and Singapore lead in Asia, and recently Japan has been active. The Japanese government is promoting this as part of policies to help individual asset growth through value-up programs and active deregulation.

- You also serve as an outside director of SK Hynix. Having been with Hynix for several years, how do you see the future of Korea’s semiconductor industry?

I have learned a lot. Especially, it is a fortune to be on the board of a semiconductor company producing HBM, a core memory chip driving AI, at the early stage of the AI era transition. Korea is an absolute leader in memory chips such as DRAM and NAND. We must maintain and develop this and expand the base. Like Japan in the past, it is important to develop materials, parts, and equipment in balance. China’s challenge is formidable. Despite U.S. sanctions, CXMT continues to grow. Competitors such as the U.S., Japan, Taiwan, and China approach semiconductors as a national security industry, providing massive support, subsidies, tax benefits, infrastructure like power and water, and workforce training. We must support the challenge and innovation DNA of technology companies well. We should also strengthen and develop partnerships with leading global companies. Another important point is to meticulously prepare plans to cope with geopolitical risks. Samsung Electronics and Hynix are included in the value-up index. To respond to this, it is necessary to reduce the financial burden of reinvestment, which is a challenge for semiconductor manufacturers. Currently, the financial burden is too large. We need to find ways to reduce the equity capital required for investment to create room for shareholder returns.

- Is there additional growth potential in Korea’s industry and finance? What remaining attractions does the Korean market have?

Innovative economy and global competitiveness of export industries remain strong. Korea has notable K-culture and a talented talent pool. Korea is still an attractive investment target. Blackstone has invested in logistics centers in Gimpo and office buildings in Gangnam. We are interested in travel and leisure industries, AI-related infrastructure such as data centers, and energy transition infrastructure. In corporate acquisitions, we are paying attention to companies related to silver (biotechnology), software technology, lifestyle, and machinery.

- As a senior figure who has observed Korea’s finance and investment industry, please give advice to the juniors who will lead Korea’s future.

Korean finance and investment industry need to actively pursue global expansion. The future of asset management is very attractive. I hope the Korean finance and investment industry realizes the dream of becoming an Asian financial hub for asset management. Korea and Japan have the potential to become Asian financial hubs after Hong Kong and Singapore. If the necessary elements are in place, opportunities will come. Also, for further development of Korea’s finance and investment industry, the proportion of real estate, which accounts for more than 70% of current household assets, should be gradually reduced. Education and policy efforts are needed on how to diversify investment portfolios and expand assets. The government’s value-up program is part of this. Financial companies must offer consumers investment products with proven global competitiveness, stability, and returns.

◇Ha Young-gu △Born 1953 in Gwangyang, Jeonnam △Graduated from Gyeonggi High School △Graduated from Seoul National University, Department of Trade △Master of Business Administration from Northwestern University Graduate School △1981 Citibank Seoul Branch △1987 Citibank Chief of Funds △1997 Citibank Asia and Latin America Regional Executive △1998 Head of Citibank Korea Consumer Finance Group △2001 President of Hanmi Bank △2004 President of Citibank Korea (5 terms) △2014 Chairman of Korea Federation of Banks △2019 Outside Director of SK Hynix △2022 Chairman of Blackstone Korea

Interview by Lee Seon-ae, Head of Securities Capital Markets Department

Summary by Park So-yeon, Deputy Head of Securities Capital Markets Department