Yun leads Hana's card integration
By Na Jeong-ju
KEB CEO Yun Yong-ro
Hana Financial Group is taking steps to quicken the integration of Korea Exchange Bank’s credit card business into its card arm, despite rising protests from KEB unionists.
That appears to be a strategic choice between Hana Chairman Kim Jung-tae and KEB CEO Yun Yong-ro to create a synergy effect from Hana’s acquisition of KEB early last year.
The union, however, claims that the early combination is in violation of Kim’s promise to ensure independent operation of KEB for five years until 2017.
Hana wants to take advantage of KEB’s vast overseas business network to develop new revenue sources in the face of a gloomy outlook for Korea’s banking sector. Kim has said he will focus on global expansion rather than competing on the domestic market.
This plan, however, is not being welcomed by unionists. How to deal with the union is a big headache for Yun, too.
Indeed, Yun’s leadership has been put to the test. The former vice governor of the Financial Supervisory Service recently unveiled a plan to launch a task force soon to merge KEB’s credit card business into Hana SK Card, the group’s credit card affiliate. KEB unionists reacted vehemently, vowing to stage an all-out struggle against management.
“My job is to seek understanding from employees for a successful implementation of this plan,” Yun said. “I will talk to the unionists directly, if necessary. That’s because an early merger of the two is necessary to secure a competitive edge over other card issuers.”
Hana officials hope the merger of credit card businesses will accelerate a “chemical” combination of Hana and KEB.
“We are different organizations having a different corporate culture. A chemical combination is the key to moving the group forward,” a Hana executive said on condition of anonymity.
Yun is trying to appease unionists.
“There is a growing consensus among KEB employees that an early integration of the two firms is unavoidable. Some think they are already one,” a KEB official said. “Yun will engage in active talks with the KEB staff to broaden support for his plans. At the same time, he will ask Hana to embrace KEB employees and work under a shared goal.”
Hana is likely to submit an application for the merger of the two credit card units to the Financial Services Commission (FSC) soon. Sources said Hana is also moving to combine KEB’s consumer financing unit, KEB Capital, into Hana Capital.
“Hana needs approval from regulators to merge Hana SK Card and KEB’s card business,” an FSC official said. “In the case of KEB Capital, there is a legal problem for Hana to keep it as a subsidiary of KEB. Under the current law, a financial holdings company cannot operate a consumer financing firm as an affiliate of a subsidiary.”
A successful integration of KEB into Hana is surely an encouraging factor for Hana in pursuing its goal of becoming a major financial player in Asia.
Hana completed a share swap in March to own a 100 percent stake in KEB as a follow-up to the acquisition deal early last year.
The KEB union claims the share swap infringed on the rights of KEB shareholders. A group of six minority shareholders filed a lawsuit with the Seoul Central District Court last month to cancel the swap. Under the agreement, 5.28 KEB shares were swapped for one Hana share, and the KEB was delisted from the stock market in April.