By Kim Jae-won
Hana Financial Group is in talks with a mid-tier Indonesian bank to buy a sizable stake in order to strengthen the group’s foothold in the fast-growing economy there, Hana said Tuesday.
The nation’s third-largest financial group said that it is interested in purchasing a controlling stake in the Jakarta-based lender which has 6 trillion rupiah (about 700 billion won) of total assets. Hana declined to unveil the name of the bank, citing ongoing negotiations.
“We are considering acquiring a major stake in the bank. The banking industry in the country is becoming larger, and we want to expand our presence there,” said a Hana spokesman. “We geared up for the acquisition as organic growth is limited to brace for the rapid change in the business.”
The group declined to confirm how big the stake is but industry sources said that it will be about 40 percent because that’s the limit dictated by the Indonesian regulator for a foreign lender to buy in its bank.
Sources say Hana will eventually merge the Indonesian bank with its two Indonesian affiliates PT Bank Hana and Bank KEB Indonesia to create a synergy effect.
PT Bank Hana is an Indonesian arm of Hana Bank, the group’s main banking subsidiary, while Bank KEB Indonesia is a local unit of Korea Exchange Bank, which it acquired from U.S.-based Lone Star Funds in February.
Hana Bank has run the Indonesian affiliate for almost five years since December 2007, while KEB has been doing business there for more than two decades since June 1990.
Industry data shows that Indonesia is an attractive market to foreign lenders. In 2001, an average bank in the Southeast Asian country marked 5.9 percent in a net interest margin, a key indicator for a bank’s profitability, more than two times that of Korean lenders.
Its return-on-asset (ROA), a core productivity barometer of a company, also posted 3 percent in 2011, while local counterparts reached around 1 percent of ROA in the same time period.
Hana moves to enforce its overseas units aggressively to find new revenue sources. Its chairman Kim Jung-tai said recently that it aims to have more than 15 percent of its revenue from overseas markets in three years to leap forward as a global player.
Experts say the nearly-saturated local market is pushing Korean banks to go overseas, but they still lag behind international rivals in terms of globalization.
They point out that having global talent is the key for Korean financial companies to compete and encourage workforces to become more specialized in international finance and overseas business.