[Promissory Note Initiative]③Hana: "Assets Safely Managed, Returns Exceptionally Delivered"

Interview with Dongshik Kim, Executive Vice President of Hana Securities
Targeting the Promissory Note Market with a Focus on 'Stability'
"Half for Corporate Investment... Supporting the Entire Business Life Cycle"

"Hana Securities' promissory notes are supported by a multi-layered defense structure, which includes liquidity management based on a high credit rating, the company's proprietary funds, and the backing of Hana Financial Group. Another strength is the ability to offer stable interest rates."

Dongshik Kim, Head of Corporate Strategy Division, Hana Securities. Hana Securities

Dongshik Kim, Executive Vice President and Head of Corporate Strategy Division at Hana Securities, stated this in a recent interview with The Asia Business Daily, adding, "There is synergy and brand power that comes from being under the large umbrella of Hana Financial Group."

He explained the overall strategy for the promissory note business, repeatedly emphasizing 'stability' and 'sustainability.' Kim stressed, "Although we are a latecomer, our goal is to become a trusted promissory note issuer in the long term, rather than focusing on short-term popularity."

After receiving approval for the promissory note business last month, Hana Securities launched 'Hana THE Promissory Note' this month. Immediately after the launch, demand surged, and the flexible and contracted volume of 300 billion won prepared for the product was sold out within a week.

Kim explained, "There was more pent-up demand than expected, and we are experiencing a full-scale shift of funds from bank deposits to securities firm products."

Legally, Hana Securities can issue up to twice its equity capital (about 6 trillion won). However, the company emphasizes that establishing a firm presence in the market is more important than rapid scaling up. This year's target for outstanding promissory notes is set at between 2 trillion and 3 trillion won.

He said, "Rather than expanding rapidly, it is important to achieve a stable market entry in the first year," and predicted, "In the second and third years, we will gradually expand, and in the mid-to-long term, we expect to reach a level equivalent to our equity capital."

He also made it clear that the company would refrain from actions that disrupt the market through excessive interest rate competition. He explained, "The Promissory Note Management Committee, along with executives in charge of products, sales, and risk, holds multiple meetings to determine the interest rate," adding, "We will only offer rates that can be stably returned to customers, taking into account our operating profit."

He also clearly outlined the direction for managing the raised funds. Hana Securities plans to keep about half of the funds raised through promissory notes in highly liquid assets to ensure redemption stability, while investing the remainder in corporate finance assets. Starting this year, the company plans to allocate at least 25% of the funds raised through promissory notes to venture capital.

Kim emphasized, "We will move away from the past structure of excessive concentration in real estate project financing and build a portfolio that channels funds to small and venture companies, as well as innovative enterprises."

He continued, "For early-stage startups, we will provide equity investments, and for growth-stage companies, we will support them through mezzanine investments such as convertible bonds (CB), thereby supporting companies throughout their entire life cycle and serving as a partner leading up to IPOs. This is the number one principle in the management of Hana Securities' promissory notes."

In response to concerns about managing maturity mismatches between short-term funding and mid-to-long-term investments in the promissory note business, Kim emphasized systematic internal management principles. He explained, "The maturity of promissory note investors ranges from flexible to one year, with an average of about six months. On the other hand, our investment assets include investments with a recovery period of more than three years, which can lead to an average duration gap of about 2.5 years."

However, he added, "We will continuously monitor to ensure that this maturity gap does not widen excessively, and we plan to flexibly adjust our funding structure and asset portfolio. Continuously managing the duration structure of assets and liabilities is the core of the promissory note business."

He further stated, "Hana Financial Group has the industry's highest level of risk management policies and internal control standards. As operations are conducted under the group's strict management system, concerns about liquidity risk are limited."

Kim described the approval for the promissory note business as "Hana Securities' fourth engine." With the addition of promissory notes as a stable funding source to the existing three pillars of wealth management (WM), corporate finance (IB), and investment management (S&T), the overall business competitiveness of the company can be elevated to a new level.

He said, "All 1,800 employees have been eagerly awaiting this approval. Especially in sales offices nationwide, whether or not we have promissory note products makes a significant difference in our competitiveness with customers."

Finally, he emphasized, "Promissory notes offer a higher return than bank deposits while remaining easily accessible to anyone. Hana Securities' role is to create a virtuous cycle in which the valuable funds safely gathered from the public become a single wave that flows back into Korea's innovative companies."