Banks Set Eyes on America, S-E Asia
Woori Plans to Purchase Hanmi Bank
By Cho Jin-seo
Staff Reporter
With the global financial crisis easing, local banks are seeking to increase their presence in the world market by purchasing some cash-strapped banks in the United States and South East Asia.
Big banks and their holding companies such as Shinhan, Woori and Hana all have enough cash as well as the willingness to globalize their businesses. This year seems a good opportunity since investors' confidence is rebounding while foreign banks on sale are still undervalued.
The most recent development was made by Woori Financial Group, the holding company of Woori Bank. On Thursday, its headquarters confirmed speculations that it was pursuing Hanmi Bank, the largest bank focused on the Korean American market on the West Coast.
``It is true that we are on course to acquire Hanmi Bank. We are going to make a direct investment from Woori Financial Group, rather than indirect investment via Woori America Bank,'' a Woori official said.
Woori America Bank is its subsidiary based in New York, so if Hanmi in California becomes part of the Woori family, the two may create synergy between the two coasts.
The official added that the talks between Woori and Hanmi have been going smoothly and they are expected to ink a deal in the near future. According to the plan, Woori will buy new shares from Hanmi and become the largest shareholder. The price and number of shares have not been decided on yet.
Hanmi operates 26 branches in California where the Korean immigrant population is concentrated. In the wake of the financial crisis in America, the 28-year-old bank has seen mounting losses from its loan business and was ordered by regulators to raise $100 million by July, according to the company.
Last year, Woori tried to become a financial investor of Hanmi in a private equity investment scheme, which was led by Leading Investment & Securities, a small securities company in Korea, and IWL Partners, a private equity firm which controls Leading. But the plan failed to win approval from the U.S. financial authorities.
The team then changed course, with Leading and IWL handing over the wheel to Woori Financial Group. The latter is already registered as a bank holding company in the United States and should therefore find it easier to get approval for the acquisition of Hanmi.
``We couldn't get approval by ourselves because we were too small to convince (the regulators), and I'm sorry about that. But we don't regret it because we learned a lot from this case,'' said a representative at IWL Partners, who refused to be named.
He also said that Leading and IWL have pulled out from the acquisition team but are still expecting a handsome capital gain ― since the financial crisis they have bought 9.9 percent of shares at Hanmi. The stock price almost doubled over the past two days since the rumor of Woori's direct investment spread.
Along with Woori, Shinhan and Korea Exchange Bank are also strengthening their sales force in North America.
State Support
Meanwhile, the Korea Development Bank plans to make a bid for Siam City Bank, the seventh largest commercial bank in Thailand, while also considering three or four other banks in Southeast Asia.
The Industrial Bank of Korea is said to have deployed due diligence teams to Indonesia to check the balance sheets of several local banks. Kookmin Bank is building a network in China, Central Asia and Vietnam.
The financial authorities are also eager to help private banks' globalization. The Financial Supervisory Service (FSS) said on Thursday that it will open help centers for Korean financial firms in eight cities around the world: New York, Hong Kong, Tokyo, Beijing, Shanghai, London, Singapore and Ho Chi Minh City.