Securities firms to focus on IB as key activity of the year
|Bank of England|
By Anna J. Park
The major securities firms plan to strengthen their investment banking (IB) departments as they see it as a key driver of growth in 2022.
Despite the decline in brokerage commissions in the second half of last year, as daily stock transaction amounts among retail investors fell during the period, companies managed to protect their profits with increased returns. IB activities.
However, the decline in brokerage commission profits among brokerage firms is expected to continue this year, with an estimated decline of around 15%. In addition, companies face a looming downturn season in major countries later this year, as well as fierce competition among local market companies in the area of online trading platforms only.
Against this background, a recent media survey also showed that over 80% of CEOs of major local securities firms chose IB as a key growth driver for this year. By implementing such CEO visions, large securities firms have placed strategic emphasis on the development of their IB departments, among their recent corporate reorganization efforts.
Mirae Asset Securities reorganized its corporate structure, creating two main divisions of IB out of its five business divisions in total. The first division IB will include alternative investment finance, such as global project finance (FP). The second division of the IB will focus on corporate finance, such as IPOs.
“By operating two main divisions on IB, the company aims to strengthen the company’s expertise in the field, to become a leading global investment banking institution,” said an official at Mirae Asset Securities.
Korea Investment & Securities has also reorganized its structure in order to strengthen its IB activity. 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 manages mergers and acquisitions operations. IB’s global agreements and strategic FP will also be strengthened through the reorganization.
NH Investment & Securities has also expanded its IB business division, creating a new “Advisory” department within IB first division, in order to further strengthen its M&A advisory functions within the company. The second division IB will strengthen its real estate PF activity.
KB Securities also reorganized its corporate structure, expanding its two IB divisions into three divisions in order to increase its ability to provide complete solutions to its corporate clients in the IB sector. The company aims to expand its dominance in the ECM market, mainly due to some of its big IPO deals this year, including the LG Energy Solution IPO slated for later this month. .