By Kim Jae-won
Shinhan Bank is well-known for its strength in retail banking and a low rate of bad loans. Now, the country’s third-largest bank by assets is looking to further leverage its strengths into business consulting, particularly by helping Korean construction companies find
new growth internationally.
Shinhan signed a memorandum of understanding (MOU) on global infrastructure investment with the Ministry of Land, Transport and Maritime Affairs and the Korea Trade Insurance Corp., a state-run trade insurance providing agency, at a hotel in Seoul last month, to assist Korean builders in foreign markets.
The agreement testifies the bank’s commitment to support the country’s Global Infrastructure Fund, which was established to help Korean construction companies expand into the overseas infrastructure business. The Global Infrastructure Fund is what finance people dub as a ``blind fund,’’ which secures the financing first and then decides where to invest. It has been invested in jointly by the government and the private sector.
Shinhan is involved in the Global Infrastructure Fund as a financial adviser. The Land Ministry promised to support in terms of pinpointing potential overseas infrastructure business, while Korea Trade Insurance Corp. will provide insurance services for Global Infrastructure Fund businesses.
Shinhan is providing consulting services to help Korean construction companies as they take on new challenges in international markets.
Local construction companies have suffered from the depressed domestic market, which was hit by the global financial crisis in 2008. Apartment prices have tumbled significantly during the period, and consequently, many construction companies were unable to find new revenue sources and forced into bankruptcy.
“We anticipate that investment in offshore infrastructure contracts will increase with the signing of the MOU,” said a Shinhan spokesman.
The fund kicked off its first project to construct a water power plant in Pakistan in December. Global Infrastructure Fund decided to invest 40 billion won and involve the Korea Water Resources Corp.
The fund also decided to pour 100 billion won into a submarine tunnel construction project in Turkey, in which SK Construction & Engineering will also participate.
“We plan to invest in overseas construction projects continuously through the Global Infrastructure Fund,” said a Ministry of Land, Transport and Maritime Affairs official.