Chapter 62
Translator: Dreamscribe
Right now, Kwangwoon Securities has a somewhat unusual management structure.
Although Jung Jin-ho was unanimously promoted to the position of CEO, all the miscellaneous tasks were handled by Vice President Kang Ji-hwan because he shouldn’t be disturbed in his investment activities.
In truth, the reason Jung Jin-ho was promoted to CEO was not only because he was the key contributor to Kwangwoon’s growth, but also because the company’s scale had expanded to the point where it was no longer appropriate for him to remain with just the title of Department Head.
So, Kang Ji-hwan took the initiative to elevate Jung Jin-ho and kept his own position as Vice President, managing the overall operations of Kwangwoon Securities.
Because no matter how much money Kang Ji-hwan made by running the operations here, it was less than 10% of the amount that Jung Jin-ho was earning.
Thus, the structure was set up in a way that Vice President Kang Ji-hwan would take care of all the headaches while supporting Jung Jin-ho to focus solely on investment.
“Vice President. We received another contact that someone wants to purchase the CDS we’re holding in bulk.”
“From where?”
“From Gold Reagan. They sold us CDS worth 1 trillion won. If Deutsche Bank goes bankrupt, they’ll have to pay the full 1 trillion to us, so it seems like they’re trying to do some risk management in advance.”
The atmosphere was tense.
The CDS that Kwangwoon Securities purchased under CEO Jung Jin-ho’s command had a premium rate of 3%.
But now, the spread had soared up to 15%.
Because of that, no one was issuing CDS related to Deutsche Bank anymore.
“Don’t tell me even Gold Reagan really believes Deutsche Bank is going to shut down?”
“Since it’s TBTF, I don’t think so. In the financial sector right now, no one truly believes Deutsche Bank will go under. They’re just preparing for a worst-case scenario, just in case.”
No one believed that a company classified as ‘Too Big To Fail’, especially one of the top three financial institutions in Europe like Deutsche Bank, would collapse.
No one, except for one person.
CEO Jung Jin-ho.
“But the CEO said he wouldn’t sell, right?”
“Yes. Gold Reagan, JP Mason, and every other company that’s tied to our CDS tried to buy them back, but he rejected them all.”
It seemed CEO Jung Jin-ho intended to see it through to the end.
If that’s the case, the financial institutions whose CDS were tied up with Kwangwoon wouldn’t just sit still.
“There are rumors going around that multiple financial institutions have joined forces to start lobbying. They’re doing everything they can to pressure the German government and the EU to bail out Deutsche Bank.”
In a way, this was a predictable course of action.
The total amount of CDS that Kwangwoon Securities currently held was a staggering 3 trillion won.
This was CEO Jung Jin-ho’s big game, to pay only 90 billion won for 3% insurance premiums and gain 3 trillion won in return.
“Apparently, rumors are starting to circulate in the media as well. That someone placed a 3 trillion won CDS bet, and the securities firms are now banding together to stop it.”
A big game of aiming to gain 3 trillion won with a payment of 90 billion won.
No matter how secretive CDS deals were as over-the-counter transactions, a scale of this magnitude made it practically impossible to keep things confidential.
“What are the chances our name, Kwangwoon Securities, gets mentioned?”
“It will probably come out soon. The stakes are too high to hide now, and Kwangwoon Securities has grown considerably.”
Kwangwoon Securities is an unlisted company.
So most people don’t know its market capitalization.
However, in terms of self-managed capital alone, Kwangwoon Securities was already outclassing other securities firms.
If CEO Jung Jin-ho were to win in this insane zero-sum game.
Kwangwoon could rise to become the number one securities firm in South Korea based on internal capital strength alone.
“But… no matter what, isn’t it impossible for Deutsche Bank to go bankrupt?”
“You never know. How many people actually thought Lehman Brothers would really go under back then?”
“But things are different now compared to back then. Wouldn’t it be better to advise the CEO to sell the CDS now while the prices are high…?”
Kang Ji-hwan pondered deeply.
If I were the CEO, what would I have done?
Since I don’t have the heart of a beast like the CEO, I would have sold all the CDS as soon as someone offered to buy them at a high price.
To be honest, even from Kang Ji-hwan’s perspective, it was hard to imagine Deutsche Bank going bankrupt. That’s why, in his heart, he wanted to run to Kwangwoon Tower right now and tell the CEO that selling would be the better option.
He had heard the CDS contracts were for five years, and if Deutsche Bank stayed intact, Kwangwoon would end up paying 90 billion won annually, totaling 450 billion in losses over five years.
“…No.”
But he soon gave up on that thought.
“Even the Chairman, when he was at Kwangwoon Securities, never interfered with what the current CEO was doing.”
Even though they were extremely close like siblings, he hadn’t even made a single call out of concern.
That was how much unconditional trust CEO Jung Jin-ho was given, no matter what he did.
And that was precisely Kang Ji-hwan’s role.
To support the current CEO so he wouldn’t have to worry about any other unnecessary matters, and just quietly watch how he continued to produce miraculous returns.
“On top of that, I keep getting this feeling.”
Why does it feel like CEO Jung is going to win again this time?
***
There’s something called the Skyscraper Curse.
What is a skyscraper?
A towering building that seems to touch the sky.
In the past, humanity angered the gods by building the Tower of Babel that reached toward the heavens.
Maybe the tradition started from then.
Empire State Building, World Trade Center, Petronas Twin Towers, Burj Khalifa, and so on, historically, every time one of these iconic skyscrapers was built, an economic crisis followed.
Moreover, the companies involved in the construction of such ultra-high-rise buildings all ended up on the brink of bankruptcy.
In other words, the Skyscraper Curse is an economic jinx.
Korea’s 63 Building and LK Tower are examples as well.
And now, Germany is no exception.
Deutsche Bank had invested a significant amount of money into a beautifully designed skyscraper construction project, and once again, the Skyscraper Curse seemed to be haunting them.
“…….”
I gazed out at the beautiful night view of Seoul from the towering high-rise building.
My palms had been drenched in cold sweat for a while now.
And for good reason.
This is a zero-sum game with 3 trillion won at stake.
If we lose, we’ll have to pay 90 billion won every year for the next five years.
We can’t even sell it to anyone else.
If Deutsche recovers from here, who in their right mind would want to buy a CDS tied to it?
[Deutsche Bank CDS, a staggering 3 trillion won. The biggest zero-sum game of the year.]
[A Korean securities firm is holding 3 trillion won worth of CDS?]
[Deutsche Bank will never go bankrupt. All expert forecasts.]
Even the media had started reporting that some unidentified party had been buying up large amounts of CDS.
But all the coverage was mocking, calling it a stupid move.
“…….”
Everyone was saying it.
That Deutsche wouldn’t go bankrupt.
But my intuition was the only one saying otherwise.
That’s why I had rejected every offer to buy back the CDS.
“Still, this time I really am nervous.”
It wasn’t just the 90 billion won payment due each year; above all, the sheer scale of the 3 trillion won bet was flashing before my eyes.
If I actually win this, the dopamine might rush to my head so hard I’d faint.
Then, a thought suddenly occurred to me.
Why is this ability manifesting within me?
What exactly is my instinct seeing?
And could there be a time when my instinct is wrong?
Honestly, no matter how many times I ask myself these questions, I never find an answer.
But sometimes, I think- what if, once I make even more money from this, I invest in a place that could scientifically study my instincts?
“It should be about time for the call to come in.”
Chairman Kang Sung-ho had already flown to Europe and was meeting with the heads of various major financial groups.
Just like he said he would, he was playing the role of the swordsman for me.
And he had promised to call me first as soon as there was a definite result.
But I still hadn’t heard anything.
Which means, could it be……
“Ah.”
As if he had heard my thoughts, the call I’d been waiting for came in.
“Yes, Chairman.”
[…….]
Chairman Kang Sung-ho remained silent.
That silence filled me with dread.
“Chairman?”
Finally, Chairman Kang Sung-ho opened his mouth, his voice heavy.
[I’m sorry……]
***
All of the Kwangwoon Securities employees were gathered in front of the TV.
They should have been getting ready for the day’s trades, but everyone in Yeouido was probably doing the same thing right now.
They were all watching the same screen, the same news.
“Ah. So it ended like this……”
The news that dominated the morning was none other than Deutsche Bank.
After all the talk and speculation, a final decision had come on the Deutsche Bank situation.
“Deutsche Bank actually went bankrupt?”
“No way.”
The official announcement came from the German government.
Just as the U.S. government once declared it would not bail out Lehman Brothers, the German government also made an official announcement that it would not rescue Deutsche Bank.
Naturally, this went against everyone’s prediction that the German government would definitely save Deutsche.
“They’ve already spent too much money on bailouts, and more than anything, the moral hazard issue held them back.”
“And apparently, the competing firms that have long resented Deutsche really did join forces. Word is they’re planning to completely dismantle Deutsche and sell off the parts to different buyers.”
People had believed in the German government because if Deutsche fell, the global financial system would shake along with it.
That’s why the prevailing expectation was that the government would bail it out no matter what.
However, the German government must have decided that if they stepped in even here, there’d be no end to it. So, they gave up on the bailout and instead reached out to European financial groups.
They were trying to prevent a financial crisis on the scale of Lehman Brothers by having them absorb Deutsche Bank.
“Ah. The stock market’s going to crash today.”
“Who would’ve thought Germany would actually abandon Deutsche?”
“Wait a minute. If this happens, then the group that made the 3 trillion won CDS bet ends up making a fortune, right?”
“Damn. I don’t know who it is, but that guy’s a real crazy bastard. How do you even place a bet on Deutsche collapsing?”
“But there’s talk that it was our Kwangwoon Securities who did it.”
Everyone tilted their heads at one employee’s comment.
“What kind of nonsense is that?”
“Come on. No matter how well we’ve been doing lately, that’s a bit much.”
“Yeah, enough with the nonsense. Let’s focus on dumping all our stocks first.”
The Yeouido stockbrokers began to move quickly, preparing for the financial market tsunami about to hit.
***
As the CEO’s office and Prime Department relocated to Kwangwoon Tower, the core staff followed to support the move.
A newly formed Research Team, larger and more experienced than the current one at Kwangwoon Securities, also made its home here.
“Wow…….”
“So, in the end, CEO-nim won again…….”
They too were witnessing this historic moment.
“W-wait a second. So we really made 3 trillion won? By paying just 90 billion? What’s the return on that? 3,000%!?”
In truth, even the employees of the Prime Department had been extremely anxious ever since the CEO suddenly announced he was buying CDS.
Even the news had openly mocked some unnamed force for foolishly buying up large volumes of CDS, how could their mental strength not be shaken?
“Every time I look at the CEO, I’m honestly in awe. The domestic and international media were flooding with mocking news, but he didn’t flinch.”
“Well, he’s already far beyond what we’d call human mental strength.”
If he were human, he would’ve wavered at least once, but he showed not a single sign of that.
No matter how many times they saw it, his steel-strong mental fortitude was astonishing.
“Kwangwoon’s name has started appearing in the media lately.”
“So what? It’s all speculation. Unless we officially confirm it.”
“But… isn’t our CEO basically a shadow mastermind at this point?”
“Huh? A… a shadow mastermind?”
“Think about it. He’s been shaking up the German market since the Dieselgate days, and now he’s finally brought down the giant financial group, Deutsche Bank.”
Probably no one in the world would believe this was all the work of one person.
Even those obsessed with conspiracy theories would’ve dismissed it if someone said that.
“Good morning, everyone.”
“Gasp.”
Everyone flinched as Jung Jin-ho entered the office.
The mastermind who had just shaken the global financial market walked in with a bright smile, just like any other day.
***
When Chairman Kang Sung-ho first called me and said he was sorry, my heart dropped.
Because I thought my instinct had finally been wrong.
But in fact, it was the opposite.
Chairman Kang had said that just to tease me.
As promised, Chairman Kang swung the sword without mercy, and even completed negotiations with the German government in cooperation with European financial groups.
So, even before the official announcement was made, Deutsche Bank’s bankruptcy had already been decided. Thanks to that, I was able to rest easy for a few days.
Several financial institutions came in with offers to buy the CDS at higher prices, but I rejected them all.
Some even went as far as to threaten me, saying I could end up losing everything.
But none of it worked on me.
Because I already knew what the outcome would be.
“HBC, ANP, large financial groups like those have stepped in, saying they’ll absorb Deutsche Bank and try to contain the aftermath of the bankruptcy. But honestly, all they can do is soften the blow. They won’t be able to fully stop the impact.”
This was the collapse of one of Europe’s top three financial institutions.
Sure, the German government had coordinated with various financial firms in advance to prepare, but when an earthquake strikes, a tsunami is bound to follow.
It’s just a matter of how strong.
“So now, not just in Korea but across the globe, all investments have basically been frozen. The investors who had spread their funds are now all pulling out and converting everything into cash.”
“What about our CDS?”
“Fortunately, the companies we signed CDS contracts with are all major corporations, so there shouldn’t be any issues with payments. Gold Reagan already said the money will be in within two days.”
With Deutsche’s bankruptcy confirmed, the winner of the zero-sum game had also been decided.
It was us, Kwangwoon.
“As I mentioned earlier, due to Deutsche’s bankruptcy, investments across all regions are being canceled or pulled out, so I’ve compiled a list of those cases.”
We had invested 90 billion won and made 3 trillion.
Normally, people would drop everything and throw a bonus party, but everyone here knows me far too well.
They know I can’t stand seeing money just sit in an account without being put to use.
So, before I even had to say anything, they had already prepared the materials.
“…….”
I reviewed the list.
There were more than a few companies that had their large-scale investments suddenly canceled.
Because of that, there were quite a number of companies trying desperately to attract new investments, even putting up large stakes for sale.
‘There’s more blue than I expected.’
The instinct flowing through my fingertips was painting the companies on the list in blue.
Since all the securities firms and banks had halted investments in order to convert everything to cash, for us, this was essentially a bargain sale.
No matter where we put the money, we’d be able to make a profit.
But this wasn’t what I was looking for.
‘If I look a little more, I feel like I’ll find it…….’
I kept flipping through the list.
There were so many companies waiting for investment that the list seemed endless.
And then.
“……?”
My hand stopped at one section.
Among all the blue, there was one company radiating a golden glow all on its own.
“Netflix?”
As soon as I said it, the staff, who had been waiting for my cue, rushed to pull up the Netflix report.
“They originally did DVD rentals, but they started their OTT service in 2007.”
“OTT?”
“OTT is still a bit unfamiliar, but you can think of it as a streaming platform, like YouTube.”
Starting with DVD deliveries, Netflix pivoted with the changing times and entered the streaming business. Recently, they announced their ambition to expand globally, not just in the U.S. but to over 150 countries.
Naturally, both investors and experts had a skeptical view.
“Most people either watch movies in theaters, buy DVDs, or just download them from illegal sites, right?”
But many people were skeptical, questioning whether users would really pay a monthly subscription and go on Netflix to watch videos through streaming.
To make matters worse, even before the Deutsche Bank incident broke out, many investors had already sensed something was off and were pulling their funds. As a result, Netflix, which had been set to receive major investments, ended up having to completely halt its global expansion.
“If something like this came out, do you think you’d subscribe to watch it?”
“I don’t know. I’d probably just buy the DVD and watch it.”
“Or just download it from a portal site.”
In the past, Korea’s internet speed was overwhelmingly faster than other countries, but that’s old news now.
These days, everyone downloads movies quickly and watches them.
But watching movies or dramas through streaming.
And paying for it monthly…?
“Netflix seems to be aware of that issue too, so they said they’re producing their own original dramas to make it so that people have no choice but to subscribe.”
Original dramas?
Even in the Netflix materials, there was a list of original dramas they had either completed or were currently producing.
“……!”
And among them, one stood out, radiating brilliantly.
It was a drama that had already completed Korean subtitles and poster production.
‘Stranger Things?’