Chapter 25
Chapter 25
-----------------------------------------------------------------
Translator: MadScientist
Chapter: 25
Chapter Title: Daeha Securities (2)
-----------------------------------------------------------------
Investment banks (IBs) are different from regular commercial banks.
To understand investment banks, you first have to dig into what a bank really is.
What is a bank?
According to South Korea's Banking Act, a bank is defined as follows:
1. "Banking business" refers to the business of taking deposits or issuing securities or other debt instruments, thereby assuming obligations to an unspecified number of people, and lending out the funds thus procured.
2. A "bank" refers to any corporation other than the Bank of Korea that engages in banking business in a regular and organized manner.
...Hmm. Not sure that clears it up.
Let's break it down simpler.
A bank is a corporation that borrows money and lends it out.
Now that feels a bit easier. The image that naturally comes to mind here is the everyday bank people think of—a commercial bank.
It takes deposits from people with extra cash to raise funds, then lends that money to those who need it at a higher interest rate than the deposits pay.
That's how most folks imagine banks make money.
But let's think a little deeper. Why deposit money in a bank instead of investing it ourselves? If I lent directly to the borrower, I'd get a higher rate, right?
Well, some people do that.
We call them loan sharks.
The shady vibe of that word gives us the answer. Lending directly to individuals is inconvenient, untrustworthy, and not exactly moral.
Park your money in a highly credible bank, and they pay interest promptly. Why would anyone take on the risk of lending to strangers themselves?
That's why we need banks.
People with surplus cash don't know who needs it or can be trusted, so they hand it over to the bank to invest on their behalf.
Of course, banks aren't charities handing out free interest. At their core, they're businesses that take customer funds and invest them.
They just have such high credit ratings that they seem like interest-dispensing vending machines.
So, the essence and core of banking is this:
'Making money flow'—that's it.
That's why banks are called the heart of capitalism, and why central banks, despite being so different from regular ones, are still called banks.
Banks make money flow.
So what does an investment bank do?
As I mentioned earlier, commercial banks raise money from individuals and lend it to other individuals.
...But what's stopping them from doing the same with companies? Aren't businesses the ones that need money the most?
Oh, sure, commercial banks do lend to companies. That's the root of what they do.
Investment banks take it a step further.
They help with corporate mergers and acquisitions, raise large-scale funds when companies need them, or invest their own capital in stocks, bonds, derivatives, and such to chase trading profits.
If I name some flagship investment banks, you'll get the idea.
JP Morgan Chase, Morgan Stanley, Lehman Brothers, Goldman Sachs...
Rings a bell, doesn't it?
These are America's premier investment banks.
My spiritual homeland, too...
And the place where I can do what I love most.
◇◇◇◆◇◇◇ "An investment bank? But..., isn't that tough in Korea?"
Ha Joo-seong tilted his head as he asked.
He's right. Even in the US right now, the golden age of investment banking hasn't arrived yet.
"Exactly. The regulations alone are insane... And our economy is just too small."
Ha Joo-seong listened intently, waiting for what I'd say next. He knew I wasn't one to spout nonsense.
"But doesn't that make the payoff all the sweeter? Korea's first investment bank... or a hedge fund."
Rebuttal came immediately from his mouth. Knowing how barren Korea's financial landscape was, he couldn't easily accept my words.
"That's impossible! How could we possibly...?"
Hmm, so his promise to object if my idea was unreasonable wasn't just empty talk.
I flashed him a grin as he reacted strongly. A charming smile that was starting to look less like a child's and more like a fresh young girl's.
"It's possible. If it's me."
"...Even just the regulations are no joke. How do you plan to handle that?"
"For now, just set up the skeleton under Daeha Securities' name. We can fill in the substance later. How long do you think these regulations will last? You can feel it too, right? The regime is about to change soon..."
Once the June Uprising forces a presidential change, policies will shift accordingly.
Things once impossible become possible... Events dismissed as absurd start happening in reality.
"...But isn't filling that substance the real issue? Even if regulations loosen, our economy's scale makes it impossible."
True. Impossible in Korea.
In our Korea.
I pulled out a pen, drew two circles on a sheet of paper, and labeled them neatly: America and Korea.
America big, Korea small, naturally.
-Tok.
I pressed the pen hard enough to nearly tear the paper, marking a big star on America, then drew an arrow from America to Korea.
"We establish a local entity in America first. Then... we come back in from the outside. When this country finally opens its tightly shut doors."
"Build scale in America, then reverse into Korea... Wow! This is... this is a mad plan. From the start, that..."
Has no chance.
Those words hovered on his lips but vanished back down his throat just before escaping.
-Bang!
I slammed the desk harder than ever, with unwavering will and conviction.
Impossible? Sure, in normal circumstances, if I were ordinary, it would be.
But.
I—if it's me.
In this world... only I alone.
Can do it.
"Have you tried?"
Suddenly, an image overlapped in Ha Joo-seong's mind.
The image of Daeha Group's founder, Yoo Seong-pil.
-"Have you tried it yourself? Are you speaking from experience?"
His catchphrase, now uttered by Yoo Seong-pil's granddaughter, decades his junior.
"Ha Joo-seong, can you really say it's impossible? That there's zero chance?"
"That's... not it. Legally, it's possible."
Cold sweat beaded on Ha Joo-seong's face.
If—and just if...
A barely adult Asian girl—no, a child, and female at that—succeeded in the world's financial center?
No one would believe it, but it was possible.
With insane skill and luck...
Legally, no barriers. Minor status restrictions could be handled with proxies.
"Then we do it."
"Whew. Though, even in America, foreigners can set up entities and operate... but large overseas remittances are impossible."
To run financial ops in the US, you must prove the funds were earned legally.
But sending big money from Korea to the US requires illegal means. Korea strictly bans capital outflows right now.
One solution.
Send small amounts and roll them locally.
"Large overseas remittances? Not needed. We earn dollars in America. We won't start with an investment bank there—we roll a hedge fund first."
"...!"
The Foreign Exchange Transactions Act bans outflows but not Koreans earning forex abroad.
It was made to prevent outflows; the government even supported those who could bring it in.
I added to the paper's circles.
IB in Korea, hedge fund in America.
On the arrow from America to Korea, I sketched dollar signs.
The American-grown hedge fund would later fill the Korean IB skeleton.
"Why do you think I chose you? In all of Daeha Group, you're the only one with Wall Street ties."
Koreans back then were woefully ignorant about finance.
To the point where, when Goldman Sachs' CEO visited the economic ministry, not even bureau chiefs showed up, let alone ministers.
The future US Treasury Secretary—a global finance titan—went unrecognized. 1980s Korea was a frog in a well.
So I'll do it.
"Find Korean-Americans in US finance who still miss Korea. Poach them somehow. Orientalist pure-blood whites work too. That's how we start the hedge fund."
I need someone who doesn't doubt my abilities.
Whether from superstition or blind faith in Daeha Group, someone to execute my craziest orders without question.
"..."
Before the silent Daeha Securities president, I felt a long-buried heat rising from deep in my chest.
"Take it slow. This is... a massive plan. Large remittances are out, but we can trickle funds over years, right? Especially laundering through Japanese real estate."
I didn't stash slush funds for fun. They're buried complexly for good use.
Japan's property bubble is soaring wildly.
...Enough that diverting billions of won would go unnoticed.
"Focus on building the skeleton in Korea for now. That's huge already. Even if impossible today, hire talent, split departments. Like US IBs do."
As if snapping to—or enchanted by my words—Ha Joo-seong poured out clear responses.
"...Right. Front Office first, then structure Back Office—that takes time. Computers too..."
I don't know this field well. Different expertise, so leave it to him.
"Yeah, exactly. Go with that vibe."
-Scratch, scratch.
The absurd plan began taking concrete shape at the fingertips of two madmen.
"Starting a hedge fund in America is easier than an investment bank. Just poach existing fund managers."
"America aside, where do you plan to source talent in Korea? Hard to find here."
"Once I'm older, I'll scout high schools. Some college kids too."
"...Sounds crazy, but I'll trust you."
-Tok.
Ha Joo-seong's pen paused briefly.
"So, when do you plan to step in?"
"...Nearly 10 years, I guess. To surpass those century-old Wall Street IBs. At least till I'm an adult."
Exactly 10 years. That's all.
Then everything changes.
As I said... I've poured a lot—a ton—into Daeha Securities.
"Got it. When you come of age... 1998."
Yes.
When Asia's four tigers crumble.
When the exchange rate, under 1,000 won per dollar, hits 2,000.
When countless firms go bankrupt and the 4th-largest conglomerate collapses like a sandcastle.
On the day of national default, I'll conquer Wall Street and make a glorious entrance into Korea.