Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Sleeping with enemy?
Shinhan Financial Group Chairman Cho Yong-byoung, left, and Hana Financial Group Chairman Kim Jung-tai / Korea Times file
By Park Jae-hyuk
Shinhan, Hana chairmen's 32 years of friendship enables alliance
By Park Jae-hyuk
Shinhan and Hana financial groups' sudden announcement Monday that they had formed a partnership to enhance their competitiveness in the global market surprised the nation's financial industry since this was the first time that financial services holding firms here had signed a memorandum of understanding (MOU) with each other.
Some people even compared this with the 1991 American film, “Sleeping with the Enemy.”
Those who are well aware of the two banking group chairmen's careers, however, could easily understand how and why they teamed up with each other.
Behind the alliance was a three-decade friendship between Shinhan Chairman Cho Yong-byoung and Hana Chairman Kim Jung-tai.
According to industry sources, Wednesday, the cooperation was initially pursued between the banking units of the two financial groups.
After employees questioned the intensifying competitions among Korean banks in foreign markets, especially in Southeast Asia, Shinhan Bank CEO Jin Ok-dong and Hana Bank CEO Ji Sung-kyoo accepted their suggestion regarding mutual cooperation overseas.
Known as experts in overseas business, Jin and Ji built more than half of their careers in Japan and China, respectively.
In January, they met privately to discuss the establishment of a consortium to buy a foreign financial firm, because both of them realized that there were many obstacles to their global expansion.
Korean banks have aroused concerns recently, since they have relied heavily on the acquisition of local financial firms in Vietnam, Myanmar and Indonesia for their expansion in the global market.
Due to their fierce competition in Southeast Asia, some of them purchased local firms for more than double any reasonable price and some took over insolvent companies.
Against this backdrop, when the two bank CEOs told their plan to their chairmen, Cho and Kim proposed a partnership between the holding companies.
The two chairmen worked together for a year in 1988 at Shinhan Bank's Yeongdeungpo branch in southwestern Seoul.
Kim, who started his career at Seoul Bank in 1981, joined Shinhan Bank in 1986.
In 1988, he was deployed to the Yeongdeungpo branch and met with Cho, who joined Shinhan Bank in 1984.
At the branch, Kim was in charge of current accounts, and Cho dealt with foreign exchange.
Back then, they used to drink soju together after finishing work.
In 1992, Kim left Shinhan Bank and joined Hana Bank as a founding member.
He served as a vice president of Hana Financial Group in 2005 and president of Hana Daetoo Securities in 2006.
He was appointed KEB Hana Bank CEO in 2008.
Since 2012, he has led Hana Financial Group as the chairman.
Cho, who decided to stay at Shinhan, was appointed Shinhan BNP Paribas Asset Management CEO in 2013.
He became Shinhan Bank CEO in 2015 and Shinhan Financial Group chairman in 2017.
Although they have been in a rivalry since they became the chairmen of each group, Cho still calls Kim a “brother” when they meet privately, according to industry sources.
Based on this long friendship, the nation's leading banking groups agreed to avoid excessive competition and pursue innovation through mutual cooperation in overseas markets.
They vowed to cooperate in seeking business opportunities, coping with various regulations, making investments in foreign markets and establishing international networks.
“This agreement will show the new paradigm of the financial industry; not just allow us to overcome our rivalry and establish a cooperative relationship,” Cho said after signing the MOU. “We hope this becomes a great opportunity for both groups to enhance their competitiveness and break through the uncertainties in the global market.”
Kim said: “We hope this agreement becomes a cornerstone for both groups to compete with world-class financial institutions.”