The new head of reserve management at the Bank of Korea is ringing the changes in terms of personnel and asset-allocation strategy, as the central bank awaits the outcome of its application for a licence to buy Chinese securities onshore.
The bank wants to fill two senior positions through an open recruitment process: chief investment officer and head of the newly created global corporate bond investment division.
The BoK started recruiting for these roles when Choo Heung-Sik, director-general of the newly restructured reserve management group, took up his post on November 21. Applications will be accepted until January 2, 2012, and those interested should contact [email protected] for inquiries or to submit applications.
Both candidates must have Korean citizenship – dual citizenships that include Korean will be accepted. The corporate bond candidate must be fluent in English and should have at least five years of directly relevant experience.
The shortlisted candidates will undergo a written evaluation process in the first half of January, followed by interviews in the second half of the month. The process is expected to be complete by early February, with the chosen candidates starting a three-year contract term as soon as possible, with the potential prospect of a second term.
Reporting directly to Choo, the CIO will be responsible for foreign investments, risk management, performance evaluation and overall supervision of foreign reserves.
BoK’s aim in setting up the global corporate bond investment division is to increase efficiency within different asset classes, says Choo, but it will not necessarily mean a greater allocation to the asset class in question. The bank previously invested in foreign corporate bonds, but under a different system and via various departments – the process will now be consolidated.
On the equities side, BoK plans to invest in Chinese A-shares for the purposes of diversification, Choo tells AsianInvestor. The bank applied for qualified foreign institutional investor (QFII) status in February 2011. If the licence is approved, it will start investing in Chinese stocks as early as late 2012.
The initial quota will be between $200 million and $300 million, says Choo. This may not be a very significant amount initially, he adds, but the BoK's objective is to take a long-term view over five to ten years or more. (The country's sovereign wealth fund, Korea Investment Corporation (KIC), is also awaiting the outcome of a QFII application.)
As for the bank’s asset management structure, Choo says it is looking at setting up systems and structures more in line with global asset management firms. That will be consistent with the BoK’s basic principles and the characteristics of its asset management structure, he says. Asset management is based on people, explains Choo, and the bank will focus on it from that perspective.
Stability and liquidity will be the most important factors for managing the BoK's $310 billion of foreign exchange reserves, while maintaining optimal opportunity costs, he adds.
Asked about the BoK’s relationship with KIC, he says there is nothing specific to comment on. The bank will support the sovereign wealth fund with a view to a “mutually beneficial outcome” and will continue to be one of the largest sponsors of KIC.