Value context and insight. lkm@koreatimes.co.kr
Shinhan strengthens investment banking abroad
Shinhan Financial Group Chairman Cho Yong-byoung
By Lee Kyung-min
By Lee Kyung-min
Shinhan Financial Group is rushing to expand its investment banking business overseas, in a long-term move to enhance the high-risk, high-yield financial service to identify new growth sources, the group said Sunday.
The group will set up an investment desk at the bank's Sydney branch in Australia in the first week of July to build a business network in a region with ample growth potential, mostly due to large-scale, state-led project financing deals.
At least one official will be sent to the country to help manage relationships with private equity and asset managers and to provide effective finance sourcing vehicles.
“The country has a great demand for investment banking deals involving mergers and acquisitions and real estate among others that require competent financing capabilities,” a Shinhan official said.
“Experience gained in Sydney will help us learn, grow and become a relevant player in global investment banking.”
The expansion is the group's latest effort to diversify global business channels, in line with group chairman Cho Yong-byoung's policies.
Cho wants to increase investment banking-derived income from about 8 percent to 14 percent of the group's net profit by 2020, an attainable goal given its strong performance in the first quarter of 2019.
The group's subsidiaries whose income is derived from banking, financial investment and life insurance among others, reported 172.1 billion won ($148.8 million) in operating profit in the first quarter, an 82 percent increase from a year earlier.
Given the subsidiaries' combined operating profit in 2018 was 479.1 billion won, this year's performance is expected to be far greater, according to the official.
“This year's performance will well surpass that of last year's,” he said. “We will continue to strengthen our overseas investment banking by close integration among our units in New York, Vietnam, London and Tokyo.”
Shinhan is among many financial groups seeking to boost their investment banking overseas.
KB Financial Group runs three investment banking units ― in New York, London and Hong Kong ― while Hana Financial Group operates in Singapore, New York, London and Sydney. Woori Financial Group has six in New York, London, Sydney, Singapore, Ho Chi Minh City and Mumbai.
Their competition will likely become fiercer and more aggressive given the limited opportunity to win lucrative deals, a former market analyst said.
“The financial groups are seeking to concentrate on growing in investment banking, a sector long dominated by securities firms,” she said. “But they will have to work harder to find strategies that clearly distinguish themselves from other competitors in a market that will eventually and inevitably become saturated.”