Shinhan Seeking to Merge 2 Asset Management Arms
By Na Jeong-ju
Staff Reporter
Shinhan Financial Group is considering combining its two asset management units as part of efforts to increase its non-banking portfolio, the group's officials said Friday.
Shinhan has formed a task force to conduct a feasibility study on a merger between Shinhan-BNP Paribas Asset Management, a 50-50 joint venture between Shinhan and France's BNP Paribas, and SH Asset Management, which is owned by Shinhan Bank.
``We are positively considering the merger of our asset management units to increase our non-banking presence,'' a Shinhan official said. ``The planned implementation of the Capital Market Consolidation Act has raised the need for a more efficient management.''
Shinhan-BNP Paribas Asset Management is the country's fourth largest with 18 trillion won in assets, while SH Asset Management is a mid-tier firm with assets of 11 trillion won.
The merger will make Shinhan the second-largest player in the industry behind Mirae Asset Management, which has some 57 trillion won in assets.
Shinhan officials said the group has signed a contract with Boston Consulting Group, which will advise on the combination of the two units and future growth strategies regarding Shinhan's asset business.
``The task force includes executives and top working-level officials from Shinhan and its asset management subsidiaries,'' the official said. ``The task force will come up with a plan to develop Shinhan's edge and overcome the tough competition with its rivals.''
Analysts forecast the asset management industry is likely to be one of the largest and most dynamic parts of the global financial services sector in the coming years with investments in securities growing at a faster speed.
Korea is now facing pressure from fast and steady growth of asset accumulation, a wider array of investment options and competition between local and global asset managers, they say.
As of now, 49 firms are doing business in Korea and 14 of them are foreign companies.
The FSS is reluctant to increase the number of asset management firms. Instead, it focuses on promoting merger and acquisition activities to create bigger players on the market to improve their competitiveness.