I Became the Youngest Daughter of a Chaebol Family-Chapter 24: Daehwa Securities (2)

An Investment Bank (IB) is different from a typical commercial bank.

To understand what an investment bank is, we first need to dig into the concept of a bank itself.

So, what exactly is a bank?

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

“Banking business” refers to the act of taking deposits or issuing securities or other debt instruments to raise funds by assuming liabilities from an unspecified number of people, and using those funds for lending as a business.

“Bank” refers to any legal entity that regularly and systematically engages in banking business, excluding the Bank of Korea.

...Hmm. That’s not very clear.

Let’s put it in simpler terms.

A bank is a corporation that borrows and lends money.

Now it’s starting to make a bit more sense. And naturally, the kind of bank that comes to mind is the one most people are familiar with—a commercial bank.

It gathers deposits from people who have excess funds and lends them out to those who need money, at a higher interest rate than the one it offers on deposits.

That’s the basic business model of a bank as most people understand it.

But let’s think a bit more deeply. Why don’t we invest our money directly instead of putting it in a bank? If we were to lend money directly to those the bank lends to, wouldn’t we make more in interest?

Well, some people do that.

We call those people loan sharks.

The unease that word stirs up gives us the answer. Lending money directly to individuals is uncomfortable, untrustworthy, and frankly not very ethical.

If you deposit your money in a highly trustworthy bank, it gives you interest on time, without fail. Why would an individual take on the risk of lending money to others personally?

That’s exactly why banks are necessary.

Those who have money don’t know where to find those who need it, nor can they assess their trustworthiness—so they deposit it in a bank and ask the bank to manage it on their behalf.

Obviously, banks aren’t charitable institutions handing out interest for free. At their core, they are businesses that take customers’ money and invest it for them.

They just seem like vending machines for interest payments because their credit ratings are so high.

So, the essence and core of banking is this:

‘Making money flow.’

That’s why banks are called the heart of capitalism. It’s also why central banks—though far removed from ordinary banks—are still called banks.

Because banks exist to make money flow.

Then what does an investment bank do?

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

...But why shouldn’t it do that for corporations as well? Aren’t businesses where money is needed the most?

Oh, of course, commercial banks do lend to businesses. That’s actually one of their fundamental roles.

But investment banks go one step further.

They assist in corporate mergers and acquisitions, raise large-scale capital for companies, or invest their own capital in stocks, bonds, derivatives, and seek profits through price differences.

You’ll get a rough idea if you hear the names of companies that represent investment banking:

J.P. Morgan Chase, Morgan Stanley, Lehman Brothers, Goldman Sachs...

Sound familiar?

These are the representative investment banks of the United States.

They were also my spiritual homeland...

And the place where I could do what I loved most.

***

“An investment bank? But... that’d be difficult in Korea, wouldn’t it?”

Ha Joo-seong tilted his head and asked.

He was right. Even in the U.S., the golden age of investment banks hadn’t arrived yet.

“Exactly. The regulations alone are brutal... and more than anything, our economy is just too small.”

Ha Joo-seong listened intently, waiting for my next words. He knew well that I wasn’t someone who spoke nonsense.

“But wouldn’t the payoff be just as sweet? If it’s the first investment bank in Korea... and a hedge fund, at that.”

A rebuttal came from his mouth immediately. Knowing well how barren Korean soil was for finance, Ha Joo-seong couldn’t easily accept my words.

“That’s absurd! How... how could that possibly work?”

Hmm, so it wasn’t just lip service—he really would object if my idea didn’t make sense.

I smiled at his reaction. A smile that had now matured beyond that of a child, closer to the charm of a fresh young girl.

“It’s possible. If it’s me.”

“...Even the regulations alone would be outrageous. How exactly...?”

“For now, just set up a rough skeleton under the name Daehwa Securities. We can fill in the substance later. Do you really think those regulations will last forever? You feel it too, don’t you—that the regime is about to change?”

The sourc𝗲 of this content is freēwēbηovel.c૦m.

If the president changes with the June Struggle, of course the policies will change too.

Things that were once impossible become possible... and what once seemed like nonsense starts to feel within reach.

“...But isn’t the substance the real issue? Even if the regulations are lifted, our economy simply isn’t big enough to support that.”

That’s true. It’s impossible—in Korea.

In Korea, that is.

I pulled out a pen, drew two circles on a piece of paper, and neatly wrote “United States” in one and “Korea” in the other.

Naturally, the U.S. circle was large, and Korea’s was small.

-Tap.

I pressed the pen hard until the paper nearly tore. I drew a big star next to the United States and drew an arrow from it pointing to Korea.

“We establish a local corporation in the U.S. first. And then... we come back in from the outside. When this country finally opens that tightly shut door.”

“So we build up scale in America, and then make a reverse entry into Korea... Ha! This... this really is a crazy plan. But the thing is...”

It’ll never work.

Those words hovered on his lips, but just before they were spoken, they were swallowed back down his throat.

-Bang!

I slammed the desk with a loud thud—filled with more conviction and determination than ever before.

It won’t work? You’re right. If things were normal—if I were just an ordinary person—it would be impossible.

But.

Me? If it’s me—

In this world... I alone—

Can do it.

“Have you even tried?”

Suddenly, an image overlapped in Ha Joo-seong’s mind.

The image of Daehwa Group’s founder, Yoo Seong-pil.

“You. Have you tried? Are you saying that after trying?”

The way he used to speak—now coming out of the mouth of his granddaughter, decades ⊛ Nоvеlιght ⊛ (Read the full story) younger than him.

“Ha Joo-seong. Can you really say it’s impossible? That there’s zero percent chance?”

“...No. Legally, it’s possible.”

Sweat beaded on Ha Joo-seong’s face.

If, just if...

If a young Asian girl—one who wasn’t even an adult yet—were to succeed in the heart of the global financial world?

No one would believe it.

But...

It wasn’t impossible.

With an absurd level of skill and a stroke of luck...

It wasn’t legally impossible. The limitations of being a minor could be bypassed with a legal representative.

This translation is the intellectual property of Novelight.

“Then, we have to do it.”

“Whew... But, while foreigners can set up corporations and operate in the U.S., there’s still the problem of large-scale overseas remittances being impossible, isn’t there?”

To operate a financial business in the U.S., you have to prove that your money was earned through completely legal means.

But sending large amounts of money from Korea to the U.S.? That’s impossible without illegal methods. Right now, Korea strictly prohibits foreign currency from leaving the country.

There’s only one way to solve this.

Just send a small amount of money and roll it locally.

“Large-scale remittance? Don’t need it. I’ll earn the dollars in the U.S. We’re not going to establish an investment bank there right away. In the U.S., we start with a hedge fund.”

“...!”

The Foreign Exchange Transactions Act bans outflow of foreign currency, but it doesn’t ban Korean nationals from earning foreign currency overseas.

That law exists in the first place to prevent foreign currency leakage. In fact, if there was even a chance of bringing in foreign currency, the government might support it.

I added new words to the two circles I’d drawn earlier on the paper.

In Korea: IB. In the U.S.: Hedge Fund.

Then I drew a dollar sign on the arrow pointing from the U.S. to Korea.

The hedge fund grown in the U.S. would later provide the substance to fill out the skeleton of Korea’s empty investment bank.

“Why do you think I chose you? In this entire Daehwa Group, you're the only one with any ties to Wall Street.”

People in this country were horrifyingly ignorant of the financial industry.

So ignorant that when the chairman of Goldman Sachs personally visited Korea’s Economic Research Institute, not even a department director, let alone a vice-minister, showed up.

Later on, that same man would become the U.S. Secretary of the Treasury—a giant of global finance—but 1980s Korea couldn’t recognize him. A frog in a well, that’s what this country was.

That’s why I’ll do it.

“Find a Korean-American in the U.S. who works in finance and still has lingering ties to Korea. Or... if needed, find a pure-blooded white guy with a bit of Orientalism. Either way, recruit someone and build the hedge fund first.”

I need someone who won’t question my abilities.

Whether it’s out of superstition, or blind faith in the Daehwa name—I need someone who’ll carry out my every insane order without complaint.

“...”

Before the silent president of Daehwa Securities, I spoke—feeling a heat rise from deep within me for the first time in a long while.

“It’s fine to go slowly. This is... a really big plan. Sure, we can’t wire massive sums overseas, but spreading it out over several years is fine, right? Especially if we use Japanese real estate—it can even work for money laundering.”

I wasn’t hoarding slush funds for no reason. I buried them using complicated methods because I needed to spend them.

At this very moment, Japanese real estate was posting insane growth rates.

...To the point that no one would notice if I siphoned off a few billion won.

“For now, let’s focus on building the skeleton in Korea. That alone is a huge task. Even if nothing works immediately, start hiring people and dividing up departments. Just like how the American IBs are structured.”

It was only then that Ha Joo-seong seemed to snap out of it—or maybe he was just fully under my spell. His words poured out in clear, precise language.

“...Right. We start with the front office, then take time to structure the back office. Hmm, we’ll need a lot of computers too...”

I don’t know much about that part. It’s a different field entirely—better to leave it to him.

“Yeah, exactly. Let’s roll with that.”

—Scratch scratch.

A ridiculous plan slowly began taking shape under the hands of two madmen.

“Starting a hedge fund in the U.S. is easier than an IB. You just have to recruit an existing fund manager.”

“That’s fine for the U.S., but what about staffing in Korea? Honestly, finding talent like that here is going to be difficult.”

“I’ll look for them once I get a bit older—in high school. There should be a few among the university students too.”

“...This is a little insane, but... I’ll trust you.”

—Tap.

Ha Joo-seong’s pen paused for a moment.

“So, when do you plan to return?”

“...We’ll probably have to wait ten years. To beat those ‘prestigious’ American IBs that have been around for over a hundred years... First, I need to become an adult.”

Just ten years. That’s all I need to wait.

Then everything will change.

Like I said... I’ve put a lot, a whole lot, of effort into Daehwa Securities.

“Understood. The day you come of age... that would be 1998, then.”

Exactly.

When the four Asian Tigers collapse.

When the exchange rate, once below 1,000 won to the dollar, hits 2,000.

When countless companies go bankrupt in a chain reaction, and the fourth-largest conglomerate in the country crumbles like a sandcastle.

On that day the nation defaults, I will have conquered Wall Street—

—and make my grand return to Korea.