Chapter 25: Daeha Securities (2)

Investment banks (IBs) are different from typical commercial banks.

To understand investment banks, we first need to delve into what a bank itself is.

What is a bank?

According to the Banking Act of the Republic of Korea, a bank is defined as follows:

1. “Banking business” means the business of lending funds raised by incurring debts from an unspecified number of people by receiving deposits or issuing securities or other debt instruments.

2. “Bank” means any corporation other than the Bank of Korea that regularly and systematically operates a banking business.

…Hmm. I don’t quite get it.

Then let’s simplify it further.

A corporation that borrows and lends money is a bank.

It seems a little easier now. The bank that naturally comes to mind here is the bank that ordinary people commonly think of, that is, a commercial bank.

It raises funds by receiving deposits from people who have surplus money, and then lends that money to people who need money at a higher interest rate than the deposit.

This is the structure of how banks, which ordinary people think of, make money.

But let’s think a little deeper. Why do we deposit that money in the bank instead of investing it directly? If I directly lent to the person to whom the bank lends money, I could obviously get money at a higher interest rate.

Well, there are people who do that.

We call those people loan sharks.

We can easily know the answer from the uneasiness felt from that word. Lending money directly to individuals is inconvenient, unreliable, and not very ethical.

If I deposit my money in a bank with high creditworthiness, they will give me interest right away, so why would an individual take the risk of lending money to others?

This is why banks are needed.

People with surplus money cannot know where people who need money are and cannot trust them, so they entrust their money to the bank to manage it for them.

Needless to say, banks are by no means charitable organizations that give interest for free. Fundamentally, they are companies that receive money from customers and invest on their behalf.

It’s just that their creditworthiness is so high that they just seem like vending machines that dispense interest.

Therefore, the essence and core of the banking business is this.

‘Making money flow’, that’s it.

This is also the reason why banks are called the heart of capitalism, and the reason why the central bank is called a bank even though it is very different from a typical bank.

Because a bank is a place that makes money flow.

Then what is an investment bank?

As I said earlier, a typical commercial bank raises money from individuals and lends money to other individuals.

-But what’s the reason for not being able to do that to companies? Aren’t companies originally the places that need money the most?

Ah, of course, commercial banks also lend money to companies. That’s the foundation of what commercial banks originally did.

However, investment banks go one step further.

They help companies merge and acquire, raise large amounts of capital when companies need it, or invest in stocks, bonds, and derivatives with their own capital to pursue capital gains.

If you hear the names of the representative companies of investment banks, you will get a rough idea.

JP Morgan Chase, Morgan Stanley, Lehman Brothers, Goldman Sachs…

Doesn’t it sound familiar?

These are the representative investment banks of the United States.

It was also my spiritual home…

Also, it is where I can do what I like most.

“An investment bank? But… isn’t that a bit difficult in Korea?”

Ha Jusung tilted his head and asked.

That’s right. Even in the United States, the heyday of investment banks has not yet arrived.

“That’s right. First of all, the regulations alone are enormous… and above all, the size of our country’s economy is too small.”

Ha Jusung listened carefully, waiting for my next words. Thanks to knowing that I am not a person who speaks nonsense.

“But, wouldn’t the rewards be that much sweeter? If it’s Korea’s first investment bank… and hedge fund.”

A rebuttal immediately came out of his mouth. Ha Jusung, who knows how barren this Korean land is for finance, found it difficult to accept my words.

“That’s impossible! How, how could that be possible?”

Hmm, it wasn’t an empty word that he would object if my words were unreasonable.

I smiled at him, who reacted violently. A charming smile that has become closer to that of a fresh young girl than a child.

“It’s possible, if it’s me.”

…First of all, even the regulations alone are not a joke, so how do you mean?”

“For now, just create the framework under the name of Daeha Securities. It’s okay to fill in the substance later. How long do you think the regulations will last? You’ve felt that… the regime is about to change, right?”

If the president changes due to the June Struggle, of course, the policies will also change.

Things that were impossible before become possible… and the possibility arises that things that were considered ridiculous will happen in reality.

“…Isn’t that substance the problem? No matter how much the regulations are lifted, it would be impossible given the size of our country’s economy.”

That’s right. It’s impossible in our country.

In our country.

I took out a pen and drew two circles on the paper, and wrote America and Korea in neat handwriting.

Of course, America is big, Korea is small.

-Thud.

I press the pen down so hard that the paper tears. I put a big asterisk on America and drew an arrow from America to Korea.

“First, establish a local corporation in the United States. And… come back in from the outside. When this country opens its tightly closed doors.”

Build up the size, and then come back to Korea… Huh! This, this is… really a crazy plan. In the first place, in that America

“that…”

It’s impossible.

Such words lingered in his mouth, but before they could be uttered, they disappeared into his throat.

-Bang!

I slammed the desk hard. With stronger will and conviction than ever before.

Can’t do it? That’s right, in a normal situation, if I were an ordinary person, it would be impossible.

But.

I, if it’s me.

In this world…, only one person.

I can do it.

“Have you tried?”

Suddenly, an image of someone overlapped in Ha Jusung’s mind.

The image of the founder of Daeha Group, Yu Seongpil.

-“Have you, have you tried? Are you saying that after trying?”

His habit of speaking, the granddaughter of Yu Seongpil, who is decades younger, speaks.

“Ha Jusung, can you really say it’s impossible? Can you say that the probability is 0%?”

“That… no. Legally, it’s possible.”

Cold sweat flowed down Ha Jusung’s face.

If, just if…

A young Asian child, not even an adult, and a girl at that, succeeds in the center of world finance?

No one would believe the story, but it was possible.

If crazy skills and luck follow…

It is not legally impossible. If there are restrictions due to being a minor, you can just appoint a representative.

“If so, we have to try.”

“Phew. But, first of all, in the United States, foreigners can establish corporations and operate… but there is a problem that large-scale overseas remittance is impossible.”

In order to do financial business in the United States, you must prove that the money was earned through completely legal means.

However, in order to send a large amount of money from Korea to the United States, it is impossible unless it is through illegal means. Currently, our country strictly prohibits the outflow of foreign exchange.

There is only one way to solve this.

Just send a small amount of money and then manage it locally.

“Large-scale overseas remittance? I don’t need it. Dollars are earned in the United States. We won’t create an investment bank directly in the United States, we’ll operate a hedge fund first in the United States.”

“…!”

The Foreign Exchange Transaction Act prohibits the outflow of foreign exchange, but it does not prohibit Korean citizens from earning foreign exchange abroad.

It’s because it’s a law enacted to prevent the outflow of foreign exchange in the first place. Rather, if there is a possibility of earning foreign exchange, the government sometimes provides support.

I added text to the two circles drawn on the paper.

IB in Korea, hedge fund in the United States.

Then, I drew a dollar sign on the arrow pointing from the United States to Korea.

The hedge fund grown in the United States will later fill the substance of the bare-bones IB in Korea.

“Why do you think I chose you? Because in this Daeha Group, you are the only person who has a connection to Wall Street.”

The people of this country were terribly ignorant about finance.

To the extent that even when the chairman of Goldman Sachs came directly to the Korean Economic Institute, not even a director-general level, let alone a minister or vice-minister, showed up.

To the extent that they couldn’t even recognize a giant of the world’s financial industry who would later become the Secretary of the Treasury of the United States, Korea in the 80s was a frog in a well.

So I will do it.

“Find a Korean immigrant in the United States who works in finance and still has lingering feelings for Korea. And… somehow win them over. Hmm, a pure white person with Orientalism would be fine too. So, create a hedge fund first.”

I need someone who doesn’t doubt my abilities.

Whether it’s superstition or vague faith in Daeha Group, someone who will carry out all kinds of crazy orders I give without complaint.

“…”

In front of the silent president of Daeha Securities, I felt the heat rising from deep inside my chest for the first time in a long time.

“It’s okay to take it slow. This is… a very big plan. Although large-scale overseas remittance is impossible, it’s okay to send it little by little over several years, right? Especially, if you use Japanese real estate, you can also launder money.”

It’s not for nothing that I tried to create a slush fund. It’s because I have a place to use it, so I buried it in a complicated way.

Japan’s real estate is already recording a crazy rate of increase.

…To the extent that no one would notice if I siphoned off a few billion won from here.

“For now, let’s focus on building the framework in Korea. This alone is a big deal. Even if it’s impossible right now, recruit personnel and divide departments. Like the American IBs do.”

As if he had come to his senses, or perhaps as if he had been enchanted by my words, Ha Jusung poured out words in a clear language.

“…That’s right. First, we need to set up the Front Office, and it will take time to structure the Back Office. Hmm, we’ll need a lot of computers…”

I don’t know much about this field. It’s clearly a different field, so it would be better to leave it to him.

“Yes, that’s right. Let’s go with that feeling.”

-Scratch scratch.

An absurd plan begins to take shape at the fingertips of two madmen.

“It’s easier to create a hedge fund in the United States than to establish an investment bank. It’s okay to just win over existing fund managers.”

Granted, where do you plan to get manpower in Korea? It will be difficult to find such talent in our country, America is

“but.”

“I’ll look for them in high school when I get a little older. There will be a few among college students.”

“…It seems a little crazy, but I’ll trust you.”

-Thud.

Ha Jusung’s fingertips stop for a moment.

“So, when do you plan to come in?”

“…I’ll have to wait almost 10 years. To surpass those well-established IBs in the United States that have been around for over a hundred years. First of all, I have to become an adult.”

Just 10 years, that’s all I have to wait.

Then everything will change.

As I said… I put a lot, a lot of effort into Daeha Securities.

“I understand. The day Miss becomes an adult, it will be 1998.”

That’s right.

When the four Asian tigers collapse.

When the exchange rate, which was less than 1000 won per dollar, hits 2000 won.

When numerous companies go bankrupt and the 4th largest conglomerate in the business world collapses like a sandcastle.

On that day of national bankruptcy, I will conquer Wall Street and make a grand entrance into Korea.