Daewoo Securities
Encyclopedia
Daewoo Securities is the largest stock brokerage and investment banking
firm by market capitalization
in Korea
. The company has been a subsidiary of KDB Financial Group since the early 2000s. Its name orginates from the large Daewoo Conglomerate of Korea
to which it originally belonged to.
Daewoo Securities has 3,081 employees in 124 branches in Korea and abroad. It has marketshare of 9% the Korean brokerage market, in terms both of trading value and commission. Business Agenda of Daewoo Securities is to become a worldwide operation, in line with the expansion plans of its parent, the Korea Development Bank
.
Daewoo Securities is a full-service brokerage and investment bank with a large client base. As well as being a stockbroker it also has wider wealth management
capabilities, aiming to provide for all its client wealth needs. It has rapidly expanded its investment banking offerings, particularly in the area of IPO underwriting, ECM, DCM, and M&A advisory.
in Korea after Hyundai
. The Daewoo Corporation was better known as an industrial conglomerate, making cars and ships and operating steel works. The South Korea
n state encouraged large and paternalistic conglomerates to use their capital to expand into unrelated businesses, protected by high tariff barriers and arcane regulations. In this way the car and steel giant Daewoo branched out into dealing in securities.
In the 1990s this strategy hit problems as South Korea opened its markets to foreign competition
and at the same time the charismatic and single minded founders of these conglomerates grew too old to run their creations and passed the reins on to their less focused children.
Daewoo Securities was spun off from the Daewoo Corporation in 1999 when the parent corporation was suffering from a debt
crisis. When Daewoo was broken up the securities division was the largest source of profits within the firm. As well as a large number of branches around South Korea, It had an international presence in London
and New York
. It was taken over by the Korea Development Bank.
The Korea Development Bank was originally owned by the government of South Korea
and its purpose to increase South Korea's industrial base by providing capital to growing companies. It was privatized in the 1990s as part of South Korea's market reforms. However, the Korea Development Bank did not have a large customer base
, being essentially a commercial bank
with some investment banking offerings. Buying Daewoo Securities, with the largest consumer
base of any Korean stockbroker remedied this situation. The bank also wished to buy Lehman Brothers
before it went bankrupt, both in order to build its investment banking capability as well as building its overseas presence.
The Korea Development Bank has developed Daewoo Securities into Investment Banking areas, using its large number of investors as a way of efficiently placing Initial Public Offering
s, in much the same way as the American giant stockbroker Merrill Lynch
operated in its heyday. It has also sold a large number of shares to the public so that the Korea Development Bank now owns less than 40% of the company, although this still means that they in effect control the company as five sixths of the remaining shares would need to be actively opposed to anything that the bank wishes to do.
One of the newer areas that Daewoo Securities has become involved in is corporate finance
, where large companies borrow money. Daewoo Securities speciality is in money market
operations, and the ability to place a large amount of securities with its large base of retail investors.
Daewoo Securities had been involved in a number of ventures in Central Asia
n republics such as Uzbekistan
. These have mostly been sold to the Korea Development Bank.
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
firm by market capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
in Korea
Korea
Korea ) is an East Asian geographic region that is currently divided into two separate sovereign states — North Korea and South Korea. Located on the Korean Peninsula, Korea is bordered by the People's Republic of China to the northwest, Russia to the northeast, and is separated from Japan to the...
. The company has been a subsidiary of KDB Financial Group since the early 2000s. Its name orginates from the large Daewoo Conglomerate of Korea
Korea
Korea ) is an East Asian geographic region that is currently divided into two separate sovereign states — North Korea and South Korea. Located on the Korean Peninsula, Korea is bordered by the People's Republic of China to the northwest, Russia to the northeast, and is separated from Japan to the...
to which it originally belonged to.
Daewoo Securities has 3,081 employees in 124 branches in Korea and abroad. It has marketshare of 9% the Korean brokerage market, in terms both of trading value and commission. Business Agenda of Daewoo Securities is to become a worldwide operation, in line with the expansion plans of its parent, the Korea Development Bank
Korea Development Bank
Korea Development Bank is a wholly state-owned policy bank in South Korea It was founded in 1954 in accordance with The Korea Development Bank Act to finance and manage major industrial projects to expedite industrial development and enhance the national economy. As Korea’s representative...
.
Daewoo Securities is a full-service brokerage and investment bank with a large client base. As well as being a stockbroker it also has wider wealth management
Wealth management
Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services...
capabilities, aiming to provide for all its client wealth needs. It has rapidly expanded its investment banking offerings, particularly in the area of IPO underwriting, ECM, DCM, and M&A advisory.
History
Daewoo Securities was founded in 1970 as part of the Daewoo Corporation, the second largest conglomerateConglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...
in Korea after Hyundai
Hyundai
Hyundai ) is a global conglomerate company, part of the Korean chaebol, that was founded in South Korea by one of the most famous businessmen in Korean history: Chung Ju-yung...
. The Daewoo Corporation was better known as an industrial conglomerate, making cars and ships and operating steel works. The South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
n state encouraged large and paternalistic conglomerates to use their capital to expand into unrelated businesses, protected by high tariff barriers and arcane regulations. In this way the car and steel giant Daewoo branched out into dealing in securities.
In the 1990s this strategy hit problems as South Korea opened its markets to foreign competition
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
and at the same time the charismatic and single minded founders of these conglomerates grew too old to run their creations and passed the reins on to their less focused children.
Daewoo Securities was spun off from the Daewoo Corporation in 1999 when the parent corporation was suffering from a debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
crisis. When Daewoo was broken up the securities division was the largest source of profits within the firm. As well as a large number of branches around South Korea, It had an international presence in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
. It was taken over by the Korea Development Bank.
The Korea Development Bank was originally owned by the government of South Korea
Government of South Korea
The Government of South Korea is divided into executive, judicial, and legislative branches. The executive and judicial branches operate primarily at the national level, although various ministries in the executive branch also carry out local functions. Local governments are semi-autonomous, and...
and its purpose to increase South Korea's industrial base by providing capital to growing companies. It was privatized in the 1990s as part of South Korea's market reforms. However, the Korea Development Bank did not have a large customer base
Customer base
The customer base is the group of customers and/or consumers that a business serves. In the most situations, a large part of this group is made up of repeat customers with a high ratio of purchase over time. These customers are the main source of consumer spending...
, being essentially a commercial bank
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
with some investment banking offerings. Buying Daewoo Securities, with the largest consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
base of any Korean stockbroker remedied this situation. The bank also wished to buy Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
before it went bankrupt, both in order to build its investment banking capability as well as building its overseas presence.
The Korea Development Bank has developed Daewoo Securities into Investment Banking areas, using its large number of investors as a way of efficiently placing Initial Public Offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
s, in much the same way as the American giant stockbroker Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
operated in its heyday. It has also sold a large number of shares to the public so that the Korea Development Bank now owns less than 40% of the company, although this still means that they in effect control the company as five sixths of the remaining shares would need to be actively opposed to anything that the bank wishes to do.
One of the newer areas that Daewoo Securities has become involved in is corporate finance
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
, where large companies borrow money. Daewoo Securities speciality is in money market
Money market
The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. Trading in the money markets involves Treasury bills, commercial paper, bankers' acceptances, certificates of deposit,...
operations, and the ability to place a large amount of securities with its large base of retail investors.
Daewoo Securities had been involved in a number of ventures in Central Asia
Central Asia
Central Asia is a core region of the Asian continent from the Caspian Sea in the west, China in the east, Afghanistan in the south, and Russia in the north...
n republics such as Uzbekistan
Uzbekistan
Uzbekistan , officially the Republic of Uzbekistan is a doubly landlocked country in Central Asia and one of the six independent Turkic states. It shares borders with Kazakhstan to the west and to the north, Kyrgyzstan and Tajikistan to the east, and Afghanistan and Turkmenistan to the south....
. These have mostly been sold to the Korea Development Bank.