Hana Bank is looking to increase its use of structured products, including credit-linked notes and convertible asset swaps to boost margins. Tae Young Li, general manager in Seoul, said the bank recently entered a USD20 million (notional) interest-rate swap with Credit Suisse First Boston on the back of a Korean convertible bond it purchased.
In the two and a half-year swap, Hana Bank pays fixed and receives a LIBOR-plus floating rate. Juwon Kim, a fixed-income sales professional at CSFB in Seoul, noted that as most banks in Korea are funded on a floating rate basis, they typically use swaps to match assets with liabilities.
The swap is based on a bond issued by Korea Deposit Insurance Corp, which is exchangeable into shares of Korea Electric Power Corp.
Hana Bank's Li added the firm is being pitched structured and credit-linked notes by several foreign banks, declining to elaborate.
