In a move that signals Goldman's efforts to boost its Korean operations, the US investment bank has hired an old Korea hand to run its local investment banking operation.

Hobart Lee Epstein - an ethnic Korean whose surname derives from the fact he was adopted by an American family - has been hired to run the investment banking division as a managing director.

Lee Epstein returns to Seoul from a three year stint in California where he ran his own consulting firm called the Peerless Group and was adjunct professor in finance at Pepperdine University's Graziadio School of Business and Management.

Prior to that he was head of investment banking at Bear Stearns in Korea and Korea country manager for CSFB. In all, he has 20 years of investment banking experience and was trained on Wall Street.

Nor is it Lee Epstein's first time at Goldman. He was at the US firm between 1997 and 2000, where he specialized in the debt capital markets and distressed debt.

As part of the overall reorganization, John Kim will assume the role of COO of the Korean investment banking operation and will relocate to Seoul. On the client coverage side, Kyungsup Song will continue to lead the client team.

Meanwhile Goldman's former Korea investment banking boss, CK Lee will formalize his retirement - a process that has rumoured to have been ongoing for the past six months.

The challenge for Lee Epstein will be to rebuild Goldman's investment banking market position in Korea - which has slipped markedly behind those of UBS, JPMorgan, CSFB and Morgan Stanley.

That is not, however, to say that Goldman has not had a profitable year in Korea. In fact, its profits have been stellar thanks to its successful investment in Jinro's defaulted debt (for more on this see FinanceAsia magazine's May cover story). Yet even this will also pose Lee Epstein some issues, since that transaction roused much Korean nationalism at Goldman's expense - thanks to the sheer size of the profit Goldman's special situations group is projected to have made (about $500 million).

However, problems aside, it is important for Goldman to get Korea right, since it remains one of the top three investment banking markets in Asia and continues to produce one of the region's strongest pipelines of M&A deals.