[비즈한국] Criticism against Shinhan Securities is mounting following the JTBC default crisis. In February of this year, during JTBC’s corporate bond issuance, Shinhan Securities issued an opinion stating that the repayment of principal and interest would likely be seamless. However, JTBC eventually defaulted, and Shinhan Securities, as the lead underwriter for the corporate bonds, is now subject to an inspection by financial authorities. JTBC investors are criticizing the firm for issuing a positive assessment despite being aware of the risk factors. Depending on how the situation is handled, it is expected to impact the leadership and potential reappointment of Lee Sun-hoon, CEO of Shinhan Securities. CEO Lee’s term ends at the end of this year.
Shinhan Securities has seen steady performance improvements over the past few years. According to business reports, net profit has increased from 100.8 billion won in 2023, to 179.2 billion won in 2024, and 381.6 billion won in 2025. While this is still short of the 412.3 billion won recorded in 2022, the firm was well-regarded for its consistent growth in net profit. However, following the JTBC default, there is talk among investors that Shinhan Securities' credibility has plummeted.
JTBC issued corporate bonds worth 93 billion won this February, with Shinhan Securities acting as the lead underwriter. In a related opinion paper, Shinhan Securities stated, "Considering the stable accounts receivable turnover and the possibility of support from affiliates in an emergency, short-term liquidity risk is judged to be limited," and added, "We believe the repayment of principal and interest will be uneventful." However, JTBC was processed for default, and the possibility of recovering the corporate bond investment has become uncertain.
It was difficult to view JTBC's recent financial state as sound. As of the end of last year, total liabilities stood at 497.6 billion won, and the debt-to-equity ratio reached 2,620.88%. Moreover, JTBC had been unable to escape deficits for years, recording an operating loss of 28.7 billion won last year.
Concerns about JTBC were also high among credit rating agencies. Kim Na-yeon, a lead researcher at NICE Investors Service, analyzed in a report this January that "(JTBC), as a flagship company within the JoongAng Group, has some financial flexibility, but due to equity restrictions on special relations under the Broadcasting Act and low profitability, it is difficult to attract external investment, delaying improvements in its financial structure," adding that "due to long-accumulated losses, it is expected to take time for financial stability to be restored."
Because of this, criticism against Shinhan Securities is high among JTBC bond investors, who argue that even though it was difficult to consider JTBC’s finances stable, the firm still gave an opinion that there would be no problems with repayment. The joint legal counsel for JoongAng Group bond victims held a press conference on July 13, pointing out, "Shinhan Securities included the risk factors in the corporate due diligence report they authored, yet still presented a positive conclusion," adding, "Circumstances have also been confirmed where IR materials focused on positive aspects were distributed to individual investors via investment advisory chat rooms right before the issuance."
The Financial Supervisory Service (FSS) recently conducted an on-site inspection of Shinhan Securities. It is known that they examined whether the bonds were issued while being aware of the risk of JTBC's deteriorating financial condition and whether investment risks were sufficiently disclosed. Furthermore, the JoongAng Group bond victims have appointed former FSS Governor Lee Bok-hyun as their legal representative. Currently, both the FSS and a former FSS governor are looking into the case related to JTBC bonds. A Shinhan Securities official stated, "We plan to respond faithfully to any requests from the FSS."
Shinhan Securities also stated that they allocated the JTBC corporate bonds to institutional investors and never recommended the sale to individual investors. However, considering that individual investors may have referred to Shinhan Securities’ opinion paper when purchasing JTBC bonds through institutions, it is difficult to say that Shinhan Securities is completely free from responsibility.
CEO Lee Sun-hoon’s term ends at the end of this year. Driven by his performance, Lee had been considered likely to be reappointed. Within the financial sector, he has even been mentioned as a candidate for the next chairman of Shinhan Financial Group. However, as the controversy surrounding JTBC's corporate bonds has erupted, his leadership is expected to face a full-scale test depending on how he manages the situation. As the FSS has launched a direct investigation, it seems unlikely that the incident will be forgotten in the short term.