Non-banking financial firms reach overseas markets

By Kim Jae-won

While Korean banks are struggling to make their way into foreign markets, the nation’s non-banking financial firms are expanding their presence overseas, officials said Monday.

Shinhan Card and Hyundai Capital are finding new business opportunities in the U.S., Asian and European markets by either acquiring a local player or helping its automaker parent company do business there. Shinhan is the nation’s largest credit card firm by market share, while Hyundai Capital is a money-lending affiliate of Hyundai Motor Group.

Last week, Shinhan Card signed with Salim Group to buy a 50 percent stake plus a share in Swadharma Indotama Finance, an Indonesian finance lease company, for $8.4 billion. Salim is the second-largest business conglomerate in the Southeast Asian country.

“The acquisition is aimed at maximizing synergy between Shinhan Card’s 30 years of credit card business know-how and Salim Group’s nationwide retail networks,” said Shinhan in a statement.

Hyundai Capital said its overseas units are growing fast by offering financial services to customers buying cars from Hyundai Motor. Assets of Hyundai Capital America have topped 20 trillion won with more than half of Hyundai Motor customers using its services.

“Auto loans service is more common in foreign countries. Thanks to the business, our units in the U.S., China and the U.K. are expanding fast,” said a Hyundai Capital spokesman.

In addition to the three key overseas units, the company has six more units in foreign markets, including Russia, Germany, Brazil, India and Canada.

However, other non-financial firms are reluctant to expand into foreign countries. KB Card and Hyundai Card said they have no plan to move overseas.

“Running an overseas business is challenging for us because it is difficult to offer financial services to customers who do not know us at all,” said a spokesman of a local credit card firm, asking not to be named.

Market watchers said local financial firms need to overcome their Koreans-only office culture if they really want to be global players.

“Many Korean firms have no foreign executives. Hiring non-Korean executives is the first step to have a strategy overseas,” said a foreign executive of a non-banking financial firm on condition of anonymity.

Carving out overseas markets has been one of the key missions of local financial firms, but few have much to show for their efforts. Some of them aggressively reached into overseas markets, mainly in Asia, but withdrew their business after failing to post profits. The financial regulator seeks to change this by urging financial firms to go global, but not many cooperate.