00:02You're listening to AI PRISM, from Seoul Economic Daily.
00:06Japan's largest investment bank just walked away from Korea's bond market.
00:11Daiwa Securities shut its entire debt desk here after 15 years in the country.
00:17Three foreign banks now control more than 40% of Korea's overseas bond mandates,
00:22the tightest concentration anywhere in Asia, outside China and Japan.
00:27Citibank Korea is weighing whether to give up its local banking license altogether.
00:31If you sit on a board here, your options for raising capital just got narrower.
00:37It's Wednesday, September 30th. Let's look at a business story shaping corporate Korea.
00:42Daiwa Securities Capital Markets Korea earned its license from Korea's Financial Services Commission
00:47back in 2011, and for over a decade it arranged foreign currency bond issuance,
00:53equity offerings, and M&A advisory for Korean corporates.
00:56Its bond desk went quiet after leading samurai bond sales for Shinhan Bank and KT last year.
01:03Then it failed to book another mandate.
01:05Earlier this year, Daiwa tried an unusual move,
01:08offering to buy up SK Inc.'s roughly 14% stake in SK Biofarm through a price return swap,
01:15a sign it was scrambling to fill the gap before it finally gave up.
01:19The top three underwriters of Korea's overseas corporate bonds, HSBC, Citigroup Global Markets,
01:28and Credit Agricole have held a combined market share above 40% for two consecutive years.
01:34That concentration now ranks as the highest among Asia's major bond-issuing markets,
01:39ahead of China, Japan, Australia, and Singapore, and it's pushing weaker players toward the exit.
01:45Daiwa's Korea headcount fell to 66 employees this year, down from 70 a year earlier,
01:52while Nomura's dropped to 106 from 114, the same earnings drought behind both retreats.
01:58Mizuho Securities added two staff, but still employs just 14 people in Korea.
02:04Goldman Sachs, Morgan Stanley, and JP Morgan all grew their Korea headcount over the same period,
02:10widening the gap between the winners and the rest. Citibank Korea is now reviewing a plan to convert
02:16its local subsidiary into a foreign bank branch, a structure that would let it skip the separate
02:22board and capital requirements Korea imposes on subsidiaries. Back in 2020, Prudential Financial
02:28exited Korea's life insurance market entirely, selling Prudential Life to KB Financial for 2.265
02:35trillion won, about 1.6 billion US dollars, as low rates squeezed its returns.
02:41So, what does this mean for corporate boards operating in Korea? Earlier, we said your options
02:47for raising capital just got narrower. Here's what that actually means for you. Fewer competing
02:53underwriters gives you less leverage on fees and terms the next time your company taps the bond or
02:59loan market, and it raises the real risk of leaning on a single relationship bank.
03:03Watch three things, whether Citibank Korea confirms its branch conversion, whether Daiwa's exit pushes
03:11Mizuho or Nomura toward a similar retreat, and whether regulators respond to industry warnings that
03:17Korea's underwriter concentration no longer matches global standards. That's today's AI Prism, CEO.
03:25This episode was produced with AI assistance based on Seoul Economic Daily reporting,
03:29and reviewed by a human editor. AI Prism is a Juan Ifra award-winning series. We'll be back tomorrow.
03:37You've been listening to AI Prism from Seoul Economic Daily.
