Shinhan leads in global banking

By Kim Tong-hyung

Those in finance will speechify about how the country’s domestically-driven banking sector needs its own version of Samsung ― a true, global contender that could mix with other national champions. Shinhan Bank claims it has the best shot at becoming the industry’s first world beater and vows to put its money where its mouth is.

While there are banks that measure larger in assets, Shinhan is comfortably atop the table that matters most ― profit. It remains to be seen whether the local pound-for-pound king would continue to punch above its weight in foreign markets but Shinhan CEO Suh Jin-won seems to be impressed by the early returns.

It is currently managing about 60 business units in 14 countries worldwide and plans to add six to seven more operations by the end of the year. The expanding businesses in developing Asian nations like Vietnam, Indonesia, India and China provide the clearest evidence that the bank is beginning to earn its global stripes. It is also firmly established in Japan.

Currently, Shinhan earns about 3 percent of its overall profit from overseas operations. Suh’s goal is to pull that proportion up by 10 percent by 2015.

“We have seen profitability at our overseas business units grow significantly this year. Aside of the newer operations that we have yet to recover costs from, profit has been strong across the board. The 10 percent objective has come within striking distance very quickly,’’ said a Shinhan official.

“The predominant focus is on Japan, China, Vietnam, India and Southeast Asian economies, which was we see as an Asian financial belt.’’

Shinhan’s accomplishment in Vietnam stands out.

Late last year, its local business unit, Shinhan-Vietnam Bank, completed the acquisition of Shinhan Vina Bank, a 50-50 joint venture established with Ho Chi Minh City-based Vietcom Bank. The combined bank now has around $1 billion won in assets, making it the largest foreign banking brand in the country behind HSBC and giving Shinhan a building block for retail banking. Shinhan is also making strides in Vietnam's fast-growing credit card industry by launching its own services.

It has been making more efforts to internationalize its workforce while maintaining the strengths of its unique corporate culture at the same time.

More than 100 Shinhan employees every year are educated at the bank’s “campus’’ in Hong Kong, where they receive four months training on international finance knowledge and skills. The company also has a “free agent’’ program that dispatches employees to branches abroad for three months, an experience company officials claim is critical.

Many Shinhan employees enroll at master of business administration (MBA) courses at universities in the United States, Europe, Japan and China, which have partnerships with the bank.

The company is also reworking its hiring policies and training programs and plans to have global branches that will increasingly rely on local talent.

Meanwhile, earlier this month Shinhan raised 600 million yuan (about $95 million) in so-called ``dimsum’’ bonds to diversify funding sources amid the prolonged global downturn.

The yuan-denominated bonds were priced to yield 3.5 percent and will mature in two years, and the bank said that the relatively low borrowing costs reflect the improving reputation of Korea’s banks and its financial markets. Dimsum bonds refer to bonds that are denominated in yuan and issued in Hong Kong. In March, Shinhan also sold debts worth 625 million yuan in the Hong Kong bond market.