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Korean banking groups at risk of losing governance autonomy

Financial firms wary of NPS ahead of shareholders' meetingBy Lee Min-hyungFinancial holding firms here will have less and less leeway in setting key agendas, as their largest shareholder ― the National Pension Service (NPS) ― is on track to widen its influence on their top management.The NPS is the largest shareholder of the nation's top four financial firms ― KB, Shinhan, Hana and Woori ― according to the latest data. The pension fund obtained more than 9 percent stakes in each of the companies as of the end of September 2020. This figure is slightly below the legal limit of 10 percent. Under the local financial law, a single investor cannot purchase more than a 10 percent stake in a single financial holding firm.The NPS' influence poses a possible threat to the financial players ahead of their planned shareholders' meetings in March. Last year, the NPS casted negative votes on their major decisions, including leadership tenure extensions and dividend rights.The world's third-largest pension fund voted against the extension of the tenures of Shinhan Financial Group Chairman Cho Yong

Feb 19, 2021By Lee Min-hyung
Korean banking groups at risk of losing governance autonomy

JKL Partners fails to normalize Lotte Insurance

Lotte Insurance headquarters in Seoul / YonhapBy Park Jae-hyukJKL Partners failed to get Lotte Insurance to turn a profit again last year, although the local private equity firm (PEF) sent 400 of the insurer's employees home and closed 40 offices out of 140 since its takeover in October 2019.Due to the unsatisfactory result, JKL is expected to face more difficulties over the next few years in its attempt to recoup its investment by reselling the insurance firm.According to a recent regulatory filing by Lotte Insurance, the company posted an operating loss of 20.8 billion won ($18 million) last year. This followed its 70.9 billion won operating loss in 2019.After Lotte Group sold its controlling stake in the insurer to the PEF in 2019 to avoid violating antitrust regulations, Lotte Insurance's new CEO Choi Won-jin, who came from JKL, said the company would post an operating profit of 113.5 billion won in 2020.Until late last month, Lotte Insurance was expected to achieve the goal because it had posted an operating profit of 97.8 billion won during the first three quarters of last year

Feb 17, 2021By Park Jae-hyuk
JKL Partners fails to normalize Lotte Insurance

Can Morgan Stanley handle both Yogiyo, eBay deals?

A man enters a Morgan Stanley building in New York in this 2007 file photo. AP-YonhapUS investment bank faces concerns over conflict of interestBy Park Jae-hyukMorgan Stanley has come under scrutiny recently among local observers of the domestic M&A market, since it was reportedly selected as the underwriter for the sales of both Yogiyo and eBay Korea.Some insiders here have raised concerns over a possible conflict of interest, given the two companies share a pool of potential buyers. Those mentioned as such are foreign and domestic private equity firms (PEFs), conventional retailers and IT firms here.Attention is therefore focusing on whether the U.S. investment bank will handle both buyout deals successfully or whether it will focus on only one of them.Scooters for delivering orders placed on Yogiyo are parked in front of its office in Seoul last June. YonhapAt this moment, the sale of Yogiyo seems to be a more urgent matter because the Fair Trade Commission ordered the Germany-based Delivery Hero ― its de facto owner ― to sell its entire stake in the food delivery service prov

Feb 17, 2021By Park Jae-hyuk
Can Morgan Stanley handle both Yogiyo, eBay deals?

Hana Financial chair may clinch fourth term

From left are Hana Financial Group Chairman Kim Jung-tai, Hana Financial Group Vice Chairman Ham Young-joo, Hana Financial Group Deputy President Park Sung-ho and former Citibank Korea CEO Park Jin-hei.By Lee Kyung-min Hana Financial Group Chairman Kim Jung-tai, 69, was among four candidates shortlisted for the group's next chairman, the group said Tuesday.The other three are Vice Chairman Ham Young-joo, Deputy President Park Sung-ho and former Citibank Korea CEO Park Jin-hei.The three-term Hana Financial chairman making the list is in line with industry expectations that he would be able to clinch a fourth term, which will be limited to one year due to his age. The group's rule stipulates that its chairman must be under 70 years of age.The financial holding firm's chairman recommendation committee said the four candidates were chosen based on their respective visions, mid- to long-term management strategies, entrepreneurship, experience, expertise, global mindset and networks. “We have confirmed the final candidates fairly and transparently in accordance with the management su

Feb 16, 2021By Lee Kyung-min
Hana Financial chair may clinch fourth term

KB Kookmin on track to build MyData platform

From left are KB Kookmin Bank CEO Hur Yin and Financial Services Commission Chairman Eun Sung-soo. YonhapBy Lee Min-hyungKB Kookmin Bank is on track to build its own MyData platform to provide more accurate, data-driven financial services for customers.According to the lender, it will finish receiving applications from big data system builders for the project on March 2. The successful firm will set up the bank's MyData service platform and manage it for a year.MyData refers to a project led by the Financial Services Commission (FSC). Financial firms which won licenses to operate MyData businesses are able to launch a series of data-powered services. Under the drive, customers can access their comprehensive financial information more easily and conveniently through a single platform.KB, one of the largest lenders along with Shinhan here, also received a license to launch MyData services. Upon completing the platform, the bank plans to provide more sophisticated and advanced credit information reference services through which its millions of customers will be able to check their credi

Feb 15, 2021By Lee Min-hyung
KB Kookmin on track to build MyData platform

Citi, Standard Chartered pressured to cut dividend payouts

Standard Chartered Bank Korea CEO Park Jong-bok, left, and Citibank Korea CEO Yoo Myung-soonBy Lee Kyung-min Citibank Korea and Standard Chartered (SC) Bank Korea are coming under pressure to significantly cut dividend payouts, in line with earlier steps taken by Korea's major financial groups at the recommendation of financial authorities increasingly influenced by public sentiment.Many Koreans feel that the high net incomes of financial services firms did not result from superior growth strategies, but from an unexpected boom in loans, some of which fueled a stock-investment craze amid the spread of the COVID-19 pandemic.The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) recently recommended financial holding firms as well as foreign banks to cap their dividend payout ratios at 20 percent, citing the need to maintain fiscal soundness. Dividend payout ratios are calculated by the paid dividend total by net income.Of Korea's top five financial groups, KB and Hana complied with the recommendation, while Shinhan, Woori and NongHyup are highly likely to foll

Feb 15, 2021By Lee Kyung-min
Citi, Standard Chartered pressured to cut dividend payouts

Woori Bank's Indonesian subsidiary BWS earns higher grade

Bank Woori Saudara (BWS) located in Indonesia / Courtesy of Woori BankBy Anna J. ParkWoori Bank is gaining momentum in its plans to extend its business portfolio in the Indonesian market, as its Indonesian subsidiary Bank Woori Saudara (BWS) officially acquired a higher grade from the Southeast Asian country's financial watchdog. Korea-headquartered Woori Bank has held a 79.88 percent stake in BWS, following the merger between Bank Saudara and Bank Woori Indonesia in 2014.According to the bank Sunday, Indonesia's financial watchdog Otoritas Jasa Keuangan (OJK) confirmed BWS' upgrade to Business Activities (BUKU) III level late last week, as BWS raised its core capital requirement to 5.2 trillion rupiah, or about 413 billion won ($373 million), as of the end of 2020. The BUKU III category is the second-highest bank capital classification category, following BUKU IV.“This is a proud achievement for BWS in the midst of an uncertain pandemic situation, as the bank succeeds at business diversification centering on digital banking, as well as its asset portfolio improvement,” a

Feb 14, 2021By Anna J. Park
Woori Bank's Indonesian subsidiary BWS earns higher grade

Banks feared to extend 'weak' recruitment practices in 2021

Customers talk with bank clerks for loan counseling at a bank's sales office in Seoul on Jan. 5. YonhapBy Lee Min-hyungCommercial banks here are expected to continue reducing their recruitment in 2021 amid falling demand for traditional bank clerks and sales offices with the rise of digital banking.According to data from industry tracker CEO Score, the actual number of employees at 19 banks here declined by 324 as of the end of last December, compared to the previous year.The number of customers who signed the National Pension Plan in the banking industry came in at 12,784 last year, but 13,108 officials in the industry lost their entitlement to the pension for reasons such as voluntary retirement.Of concern is that banks have little willingness to increase recruitment this year due to the growth of non-face-to-face transactions following the COVID-19-induced economic fallout. Lenders hope to invest more on setting up sophisticated digital banking platforms, rather than hiring new clerks for conventional work.“For banks, increasing the number of conventional clerks does no good

Feb 10, 2021By Lee Min-hyung
Banks feared to extend 'weak' recruitment practices in 2021

JB Financial achieves record earnings in 2020

JB Financial Group headquarters in Seoul / Courtesy of JB Financial GroupBy Lee Min-hyungJB Financial Group reported an annual net profit of 363.5 billion won ($325.7 million) for 2020, up 6.3 percent from the previous year, powered by double-digit growth at its banking subsidiary, the financial holding firm said Tuesday.Jeonbuk Bank, one of JB's two banking affiliates alongside Kwangju Bank, led the group's stable growth by achieving 124.1 billion won in net profits, up 13.4 percent from 2019; even though the latter's net profit fell 7.5 percent to 160.2 billion won.In addition, the group also said its profit from non-interest income also jumped 51 percent to 93.9 billion won during the same period.JB's return on equity (ROE), a key barometer of a bank's profitability, reached 10.1 percent last year, down by 0.1 percentage point. But the figure is still well above the average ROE of major commercial banks here. JB is the only Korean financial holding firm whose ROE exceeds 10 percent.JB Woori Capital, a credit finance subsidiary, also reported whopping earnings growth of 26 percent

Feb 9, 2021By Lee Min-hyung
JB Financial achieves record earnings in 2020
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