Shinhan Bank begins to flex global muscles
While there are bigger banks, Shinhan Bank has cemented its status as the pound-for-pound profit king in the cut-throat banking industry. It remains to be seen whether the bank will be able to leverage its domestic dominance into global success.
Korea, a pint-sized nation squeezed between regional giants of China and Japan, will always carry a sense of insecurity about the future of its economy. This perhaps explains why Korean companies in virtually every industry are prating ad nauseam about penetrating global markets.
Such speechifying echoes in the financial services sector as well, despite critics who say that banking is essentially a domestic business and should remain as one.
But while every banking group is obsessed about how they are advancing their international business network and generating a larger proportion of their profit from overseas, ``going global’’ has usually been just a nice way of saying they are providing loans and other financial services to Korean firms operating overseas.
Shinhan Bank, the key unit of the Shinhan Financial Group, appears to have bolder things in mind. While the bank is putting in significant efforts to develop better financial services for internationally-operating Korean companies that are tailored to conditions for each market, Shinhan Bank CEO Suh Jin-won has made it clear the eventual goal is to compete with local players over local customers, both commercial clients and individuals.
``While others may chase headlines, we are after results. We will avoid a department store approach ― trying everything at every market and hoping that something sticks ― and be more specific about the countries we are targeting and the markets we can exploit there,’’ said a high-ranking Shinhan Bank executive.
``We will be establishing seven to eight new branches in key markets and rearrange some of the foreign business units to be more effective. We are happy about our activities in the emerging markets we are in, but will be looking to expand to more countries. A variety of options are considered, both growing organically or through M&A, which could be an option in nations like Indonesia.’’
At the end of last year, Shinhan Bank’s international network consisted of 66 business units in 14 countries. The company plans to add seven or eight more branches in these countries this year, while exploring other projects in other markets.
The bank has been strengthening its sales operations and other activities in key foreign markets like China, Japan, India and Vietnam. It also appears to be sniffing around for merger and acquisition (M&A) activities in emerging Asian markets and elsewhere.
Shinhan Bank’s activities in Vietnam have garnered particular attention. Late last year, the bank’s local business unit, Shinhan-Vietnam Bank, completed acquiring Shinhan Vina Bank, a 50-50 joint venture established with Ho Chi Minh City-based Vietcom Bank.
The combined bank now has more than 1 trillion won in assets, making it the largest foreign banking brand in the country behind HSBC, allowing Shinhan Bank to wield greater influence in the country’s retail banking sector.
Not satisfied still, Shinhan Bank is also making strides in the Vietnam's fast-growing credit card industry by launching its own services.