New Employees With an Annual Salary of 1 Trillion Won - Chapter 144

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This chapter was translated by Lunox Team. To support us and help keep this series going, visit our website: LunoxScans.com
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Chapter 144. One Plus One (3)

The government moved swiftly.

News that card company representatives had been summoned to the Blue House leaked through the media.

Within just a few days, regulations limiting card issuance and cash advance services were announced.

“With the Blue House stepping in, the card companies are certainly moving quickly.”

“However, the market isn’t showing much reaction yet.”

“There’s no reason to react since the scale of non-performing loans hasn’t been disclosed. We’ll create the reaction ourselves. The government has given us the starting signal, so let’s move now.”

The market still didn’t properly understand the Blue House’s card company regulations.

Card company stock prices showed little volatility, and the media didn’t make a big deal of these measures either.

“I’ll hand over the materials to the credit rating agencies.”

“Once the scale of non-performing loans is revealed, the credit rating agencies will immediately downgrade Korean card companies’ credit ratings. Only then will the market start reacting belatedly.”

When foreign media steps in, lukewarm water tends to boil over instantly.

And with the Blue House’s intervention, card companies could no longer hide the scale of their non-performing loans.

They clearly wouldn’t be able to mount a proper rebuttal, and had no choice but to wave the white flag of surrender.

“Are all the short selling volumes and CDS contracts completely finalized?”

“We’ve secured all the planned volumes. We’ve secured over 5 trillion won in short selling volume, and contracted over 5 trillion won in CDS as well.”

“Then there’s nothing to wait for. Let’s dump the short selling volume.”

It was time to release over 5 trillion won in short selling volume into the market.

When card company stock prices suddenly began falling simultaneously, the market would start paying attention.

If global credit rating agencies then collectively downgraded card companies’ credit ratings at that moment, the market would be swept up in a fierce storm.

“We’ll begin the short selling operation immediately starting today.”

“We need to properly promote Hanseo Card during this opportunity. Let’s focus our promotion on the point that while other card companies are all suffering from non-performing loans and severe delinquency rates, Hanseo Card is different.”

There was no reason to miss this opportunity.

Hanseo Card had already been strictly managing issuance screening and maintaining stable control over its non-performing loan ratio.

“We’ll proceed with various media advertisements highlighting that it’s the only safe card in this crisis.”

“Good. The more Hanseo Card advertisements run, the more the other card companies’ problems will stand out. Push aggressively.”

These advertisements weren’t simply meant to promote Hanseo Card.

They were attack advertisements targeting competing card companies, and that alone could drag their stock prices down further.

Therefore, even if the advertising costs were several times higher than normal standards, it wasn’t wasteful at all.

We’d recover the advertising costs through short selling and still have plenty left over.

***

Card company stock prices began plummeting.

Around the time Tiger Fund had dumped over half of its short selling volume.

Global credit rating agencies collectively downgraded Korean card companies’ ratings.

“Branch Manager, all card company stock prices have fallen over 15%. GL Card in particular, the industry leader, has plummeted over 20%.”

“Korean credit rating agencies will react soon too.”

“GL Card has reportedly requested support from a bank consortium for debt repayment. With large-scale losses and liquidity crisis becoming reality, a rating downgrade is just a matter of time.”

We had to row when the tide was coming in.

Now that the media was also starting to cover card company insolvency issues as their main story.

There was no reason to hold onto short selling volume while timing the market.

“Dump all the short selling volume within this week.”

“If 2.5 trillion won worth of short selling volume is released into the market in just one week, card company stock prices could fall close to 30%.”

“GL Card’s stock price could drop over 40%. When that happens, they’ll be reaching out everywhere begging to be saved.”

We didn’t need to extend our hand yet.

We could conduct advantageous negotiations only if GL Group reached out to us first.

“But fear is spreading faster than expected. Some media outlets are even reporting that the card company crisis could spread to the banking sector.”

“With concerns emerging that the entire financial system could be shaken, the government will intervene more actively.”

It was a race against time.

The government was trying to wrap up the situation before the World Cup somehow, but the fire was already spreading uncontrollably.

“The government shows signs of wanting to intervene, but they don’t seem to have found a clear solution yet.”

“They probably didn’t expect the situation to spread this quickly.”

Our prediction was exactly right.

The government and financial authorities couldn’t come up with proper countermeasures, and eventually reached out to us, who had first warned of the crisis.

“We’ve received contact from the Financial Services Commission. The Chairman wants to meet with you directly, Branch Manager.”

“If the Financial Services Commission calls, I naturally have to go. Tell them I’m coming right now.”

The Financial Services Commission Chairman who had driven me out on New Year’s Day.

But as the situation spread uncontrollably, he had no choice but to reach out to me.

***

When I arrived at the Financial Services Commission, the Chairman personally welcomed me.

Perhaps feeling guilty about New Year’s Day, the Chairman greeted me with the softest expression possible.

“Branch Manager, have you been well? Thank you so much for coming despite being summoned so urgently.”

“When the Chairman calls, I naturally have to rush over. It’s an honor just to be invited.”

“Let me apologize first. I was overly excited that day. I misinterpreted your sincere advice.”

The Financial Services Commission Chairman’s apology made my heart heavy.

It should have been a situation to celebrate, but if the Chairman was apologizing, it meant he wanted that much more, so I couldn’t be happy.

“Not at all. I understand well that you acted from concern for the national economy. So there’s no need to apologize.”

“Thank you for saying that. But the situation is spreading much larger than expected.”

“I’m sorry. It seems the situation has become more serious because of Tiger Fund’s short selling.”

I unnecessarily brought up short selling.

It wasn’t a story I needed to mention, but this was part of the plan.

“Tiger Fund just did what it had to do. I’m absolutely not trying to blame Tiger Fund.”

“Thank you for saying that.”

“Hmm… Still, I heard you’ve made considerable profits from short selling. Isn’t it about time to wrap things up?”

It was subtle pressure.

Since it was burdensome for financial authorities to make such direct requests to a foreign fund, the Chairman maintained the most cautious tone possible.

“It’s confidential, but we’ve already set liquidation criteria with Tiger Fund Headquarters. To be precise, it’s not about timing, but we have a policy to liquidate when card companies move in a specific way.”

“You’re saying Tiger Fund knows the signal for when the situation will calm down. What is it?”

“That’s confidential. If I told you, Tiger Fund would have to give up a certain portion of profits.”

I needed to make clear that Tiger Fund would suffer losses.

Only then could I maintain negotiating leverage going forward.

“Please, I’m asking you. If this crisis can just be suppressed early, we’ll guarantee Tiger Fund’s convenience as much as possible going forward.”

“It’s really something I shouldn’t tell you, but when the Chairman asks like this, how can I keep hiding it? The liquidation criteria we set with headquarters is just one thing. The moment a card company and its parent bank announce a merger, we agreed to close all short positions.”

There were roughly two types of Korean card companies.

One was card companies under large corporations like GL or Samjin.

And the other was card companies whose parent companies were banks.

“You think the situation will calm down if banks merge with their subsidiary card companies?”

“That’s right. No matter how large the card companies’ debts are, commercial banks can handle them sufficiently.”

“Bank-affiliated card companies could be resolved through mergers, but wouldn’t large corporation-affiliated card companies be difficult?”

The Chairman showed great interest.

While making an expression like I really didn’t want to tell him, I continued with detailed explanations.

“Large corporations that own card companies usually also operate securities companies. If securities companies and card companies merged, everything except one place could be resolved.”

“Which place are you referring to?”

“GL Card. To capture the industry’s top position, they issued cards much more recklessly than other card companies, and their non-performing loan scale is also the largest.”

This was why I had presented a solution to the card crisis.

Most card companies could be resolved through the method I suggested, but GL Card was an exception.

If other card companies stabilized one by one, but the situation didn’t calm down because of GL Card alone?

The government would eventually have no choice but to pressure GL Card even more strongly.

When that moment came, Tiger Fund could naturally get a golden opportunity to acquire GL Card.

“Wouldn’t it be possible to resolve this if GL Group supported GL Card at the group level? GL Group is still one of Korea’s representative large corporations, isn’t it?”

“If GL Group gave up a lot, they could save GL Card, but that possibility doesn’t look likely.”

“I understand the Branch Manager’s thoughts well. Let’s arrange to enter the Blue House within this week to discuss merger-related matters. No matter how delayed, the banks and large corporations will be summoned to the Blue House or Financial Services Commission within next month.”

The Chairman was subtly passing along information.

It was intelligence that the banks would soon proceed with mergers with card companies, so we should wrap up short selling before then.

“Tiger Fund will also move to help the card crisis settle as quickly as possible.”

“Let’s meet again soon. Today was truly a beneficial time.”

“If the Chairman calls, I’ll come running anytime.”

It was time when both parties got what they wanted.

The Chairman obtained a solution to calm this crisis.

And I gained an opportunity to get one step closer to acquiring GL Card.

***

I returned straight to the fund office.

I briefly explained to Song Sang-yeon what happened at the Financial Services Commission.

“I’ll arrange to liquidate all short selling positions before next month.”

“There’s no need to rush too much. It’ll take longer than expected for the Chairman to persuade the Blue House and summon the banks and large corporations.”

“That’s true, but the scale is so large that we’ll need quite a long time to begin liquidation ourselves.”

The short selling scale alone was 5 trillion won.

Plus with CDS contracts worth 5 trillion won, it couldn’t be settled all at once.

“Don’t liquidate GL Card short positions, just leave them. They’ll actually decline further compared to other companies.”

“I’ll do that.”

“What do you think the expected profits from short selling will be?”

“Card company stock prices are falling daily, making precise predictions difficult, but we expect 40-50% returns.”

Since we invested 5 trillion won.

This short selling could yield 2.5 trillion won in profits.

Plus if GL Card declined further, additional profits were possible.

“CDS profits should be similar.”

“Yes. Contract premiums have already skyrocketed. If we resell to the market now, we expect nearly 50% returns.”

“Sell them immediately when premiums reach their peak.”

CDS had a structure where premiums increased as bankruptcy risk grew.

Since Korean card company stock prices were plummeting now, premiums naturally had to soar.

We could only receive the highest price by selling before restructuring measures like mergers and acquisitions were announced.

“Contact the Investment Bank right now to proceed with CDS sales.”

“Yes, understood.”

“And while you’re at it, inquire about products to bet in reverse.”

“In reverse… you mean we should create and sell new card company CDS ourselves?”

“That’s right. Risk is maximized now, but once mergers are announced, the situation will flow in reverse. It’s disappointing to just take premiums and end it, right? If we know credit will recover, we should use that knowledge in reverse to profit once more.”

Wall Street’s financial products evolved endlessly.

Especially derivatives poured out continuously.

If you could accurately read market flows, you could actually earn much larger profits through derivatives.

“I’ll proceed with CDS sales and reverse CDS product inquiries simultaneously.”

“If that proceeds smoothly, we could aim for profits reaching 12 trillion won from this investment.”

“We’ll lose fees here and there, but theoretically at least 11 trillion won in profits is possible.”

The funds needed for GL Card acquisition were somewhat secured.

Of course, acquiring GL Card with just 12 trillion won would be impossible right now, but the market would lower GL Card’s price on its own.

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