Golden Spoon Investment Portfolio - Chapter 170

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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170. Do you really want to try this?

“Did I say I opposed it?”

As Go Young-il narrowed his brow and looked at me, I nodded without the slightest hesitation.

“Yes, sir.”
“Well, this is surprising. I thought someone like you, who makes aggressive investments, would naturally welcome this. I’m quite taken aback.”

It wasn’t mere conversation—bewilderment was plainly written across Go Young-il’s face.

“I do make aggressive investments, but I thoroughly examine opportunities and only place bets when I see a genuine chance of winning. I don’t simply throw money at something just because it promises returns.”

Go Young-il folded his arms and listened, as if willing to hear me out.

“On the surface, finance companies appear to be generating substantial profits, but when you examine the reality beneath, they’re making money through extraordinarily precarious transactions—like walking a tightrope suspended over a bottomless cliff.”
“What do you mean by that?”

Go Young-il asked with a puzzled expression.
I leaned forward and explained in a serious tone exactly what dangerous transactions these finance companies were engaged in.

“As you’re well aware, the primary revenue source for finance companies is borrowing short-term funds at low interest rates and lending them out long-term at higher rates, pocketing the spread. In other words, they profit through maturity mismatches between short and long-term funds.”
“Isn’t that exactly how commercial banks make their money too?”

I nodded readily at his observation.

“Of course. But finance companies have devised one additional trick to maximize their profit margins.”
“….”
“They raise capital in foreign currency.”
“Isn’t that only natural? Borrowing dollars from abroad carries far lower interest rates than borrowing domestically.”

Go Young-il looked at me as if questioning what the problem was.

“As you said, since the primary profit for finance companies comes from capturing the spread between short and long-term rates, they naturally need to borrow at the lowest possible rates.”
“Exactly right. As long as everything meshes perfectly and operates smoothly, finance companies can continue generating high returns without any particular issues.”

I paused briefly, then looked directly at Go Young-il and spoke again.

“What do you think would happen if an unforeseen variable no one anticipated suddenly emerged and brought the circular flow of money to a complete standstill?”
“…!”
“At that moment, everything would collapse into catastrophe.”

In fact, one of the primary catalysts for the International Monetary Fund crisis was the massive short-term foreign debt that finance companies had recklessly accumulated.

“I understand your concerns well enough. But aren’t you overestimating the risk of something that’s extremely unlikely to occur?”

Go Young-il continued speaking with one leg crossed.

“It’s like refusing to make kimchi out of fear of maggots. The profits we can gain from finance company and commercial paper transactions are far too substantial to abandon for such a trivial reason.”

It was natural for him to react this way, unaware that an enormous trial called the International Monetary Fund would arrive in just over two years.
I wanted to tell him that the golden age of finance companies had barely two years remaining, but that would require bringing up the International Monetary Fund, so I could only suffer in silence.

“The most fatal problem with finance companies is that most of their raised capital consists of dollar debt borrowed from abroad.”
“As I mentioned before, isn’t that precisely because foreign interest rates are much lower than domestic ones, so they’re profiting from the interest rate differential?”
“That’s correct. But what happens if the circular flow breaks down and the exchange rate spikes simultaneously?”

Go Young-il’s expression hardened as he immediately grasped the implication.

“To repay the funds borrowed from abroad, they need to convert won into dollars. If the exchange rate surges, they might have to repay two or three times the original amount they borrowed.”
“I’m well aware of how terrifying dollar debt can be. But our country is using a fixed exchange rate system—what’s there to worry about?”

Go Young-il responded dismissively, as if it were nothing serious.
True to his words, Korea was still operating under a managed floating exchange rate system at this time.
Unlike a freely floating exchange rate system where rates fluctuate freely according to market conditions, the central bank and government directly or indirectly intervened to keep the exchange rate fixed.

‘Finance companies are so recklessly taking on dollar debt precisely because they’re relying on this.’

Since the exchange rate wouldn’t change anyway, the more foreign debt they brought in at lower interest rates, the greater their profits—it was essentially a risk-free business operation.

“In my view, you’re being overly cautious.”
“That’s not quite it….”

I attempted to persuade him further, but Go Young-il raised one hand to silence me.

“I’ve heard your opinion clearly enough, so let’s drop this matter.”

It was an unsatisfying conclusion, but I couldn’t continue dragging out the conversation when he wanted to end it.
I closed my mouth reluctantly, harboring an uneasy feeling deep within.

“You must have much to attend to. Let’s call it a day.”
“Yes.”

I rose from my seat and left the office.
As the door closed and Go Young-il found himself alone, he glanced briefly at the spot where I had been sitting and smacked his lips.

“This throws the plan completely off course….”

After much deliberation on how to elevate Daehung Securities to the next level, Go Young-il had arrived at the idea of acquiring a Finance Company.
By bringing a Finance Company under his wing—one that accepted deposits like a bank, managed CMA accounts, and issued promissory notes—he could dramatically expand the company’s scale and profitability in a short timeframe.
His grand vision was to develop Daehung Securities into a comprehensive financial services firm by positioning the PI Department under my management and the Finance Company as dual engines of growth.
If the plan succeeded as intended, Daehung Securities would surge into the industry’s top tier, and Go Young-il would earn recognition for his achievements, securing his position as representative director in the next term.
With this vision in mind, Go Young-il had drafted a rough master plan and shortlisted several candidate subsidiary companies and Finance Companies for acquisition. He had planned to present this strategy to Park Tae-hong, the group owner, at the executive meeting scheduled for the following week.

“I had hoped that if Park Tae-hong backed the plan then, everything would proceed much more smoothly. What a disappointment.”

It was already common knowledge within the group that Daehung Securities would be spun off and given to me, the second-ranking figure.
Moreover, given Park Tae-hong’s strong confidence in me, Go Young-il’s strategy had been to win me over as an ally first, making the plan’s execution far easier.
But contrary to his expectations, I had unexpectedly opposed it outright, saying it was absolutely impossible. The brakes had been applied from the very start.

“This is truly troublesome.”

Go Young-il crossed his arms and furrowed his brow deeply.
Though I was merely a department head, my background was too daunting to simply ignore and push the plan forward regardless.
Frankly, there was a very real possibility that I would inherit and become the owner of Daehung Securities in the future. If he forced through something I had clearly opposed, the relationship would inevitably become awkward.
At best, that would be fortunate. At worst, I might feel disrespected and harbor resentment.
Of course, based on my personality as he had observed it so far, I didn’t seem like the type to hold grudges. But one could never be certain about people.

“If that happens, even if the plan succeeds, there’s nothing to gain from it.”

If he became estranged from me, it would be difficult to maintain his position as representative director long-term, which was his ultimate objective.
Go Young-il sat on the sofa, his expression troubled, tapping the armrest absently.

“Yet it’s too valuable an opportunity to simply let slip away.”

No matter how much I thought about it, I couldn’t easily let go of the attachment.
Especially the CP issuance and sales business, which was like a goose that laid golden eggs, was far too attractive—a venture where money could be made in massive chunks simply by setting up shop.

“Tsk. There’s a pile of money right in front of me, and I can’t pick it up.”

Go Young-il muttered with a pained expression.
Though he held the title of president, it was pathetic that he had to defer to such a young department head, but unlike himself—a mere salaried executive—Seok-won was a direct heir to the owner, so there was nothing he could do about it.

“I should have known better than to bring this up in the first place.”

He regretted it now, but it was already spilled milk.
Besides, if he had simply proceeded without mentioning it and Seok-won opposed and blocked him when he tried to formally push the plan forward, the situation would have become even more complicated.
It was far better to confirm Seok-won’s intentions before reporting to Chairman Park Tae-hong and then decide how to proceed.
Go Young-il, stroking his chin with one hand as he deliberated, finally made his decision.

“It’s unfortunate, but there’s nothing urgent about it right now, and there’s no benefit in clashing with Seok-won. I should put this matter on hold for now.”

* * *

Meanwhile, back in my private office, I sat at my desk with a heavy expression and clenched both fists tightly.

“Of all things, why did they have to set their sights on finance companies?”

Though they appeared to be golden geese generating massive profits right now, finance companies were nothing but time bombs that would soon plunge Korea’s economy into ruin.

“The new Midopa Department Store Gangnam branch alone, which is essentially built on loans, is already a headache. If the finance company bomb explodes on top of that, the Park Group won’t be able to survive it.”

Of course, with the wealth I possessed, I had more than enough to plug the holes and prevent bankruptcy.
But if the IMF crisis erupted, that capital could be used several times more effectively and valuably, and it would be a waste to spend it merely on a debt-fueled spending spree.

“Moreover, if I don’t acquire the finance companies, that money doesn’t need to be used at all.”

If I wanted finance companies, it would be far more profitable to wait until the IMF crisis made them dirt cheap, then cherry-pick the best ones and scoop them up.

“By that time, the government will have wiped out all sorts of bad debts and provided various relief measures, and their valuations will have plummeted to nearly nothing. Even if I acquire them, there’s no reason for significant problems to arise.”

If I stripped away all the bad debts and received additional support and preferential treatment while acquiring the finance companies, I could create synergies with Daehung Securities just as Go Young-il expected and elevate the company to the next level.
Then suddenly, a glimmer of insight flashed across my eyes.

“There’s no reason to limit ourselves to just Finance Companies. Acquiring one of the commercial banks outright isn’t exactly impossible, is it?”

If I said such things now, people would call it absurd, but during the IMF crisis, when the entire nation was in chaos, American hedge funds actually did acquire commercial banks.
Those American hedge funds that acquired banks at bargain prices reaped enormous profits—several times their initial investment—through dividends and equity sales over the years, becoming a major source of controversy for a long time.
But there was absolutely no reason why Daehung Securities, or rather I, couldn’t acquire a bank.

“Should I actually try it?”

It was an idea that had occurred to me without much thought while pondering other matters, but somehow it felt far more plausible.
I began to contemplate the bank acquisition more seriously, my expression turning grave.

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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