By Anna J. Park
Major securities firms plan to strengthen their investment banking (IB) departments, as they view it as a key driving force for growth in the year 2022.
Despite dwindling brokerage commissions during the second half of last year, as daily stock trading transactional amounts among retail investors dropped during the period, the companies successfully managed to guard their earnings with increased returns from IB businesses.
However, the fall of brokerage commission profit among securities firms is expected to continue this year, with an estimated decrease of around 15 percent. In addition, the firms face a looming tapering season in major countries later this year, as well as heated competition among companies in the local market in the area of online-only trading platforms.
Against this backdrop, a recent media survey also showed that over 80 percent of CEOs at major local securities firms selected IB as a key growth contributor for this year. Implementing such visions held by CEOs, major securities firms put their utmost strategic emphasis on developing their IB departments, among their recent company reorganization efforts.
Mirae Asset Securities has reorganized its company structure, creating two main IB divisions out of its total five business divisions. The first IB division will include alternative investment finances, such as global project financing (PF). The second IB division will focus on corporate finances, such as IPOs.
"By operating two main divisions on IB, the company aims to strengthen the firm's expertise in the area, to become a global top-tier investment banking institution," an official from Mirae Asset Securities said.
Korea Investment & Securities has also reorganized its structure so as to strengthen its IB business. The company operates three IB divisions: the first division deals with IPOs; the second division covers DCM (debt capital market) and ECM (equity capital market); and the third division handles M&A deals. Global IB deals and strategic PF will also be strengthened through the reorganization.
NH Investment & Securities also expanded its IB business division, newly creating an "Advisory" department within the first IB division, to further strengthen its M&A advisory functions in the firm. The second IB division will fortify its real estate PF business.
KB Securities also reorganized its company structure, expanding its two IB divisions into three divisions to heighten its capacity to provide comprehensive solutions for its corporate customers in the IB sector. The firm aims to expand its ECM market dominance, mainly due to some of its big-time IPO deals this year, including LG Energy Solution's IPO set for later this month.