 |
| Shinhan Financial Group Chairman Cho Yong-byoung. Korea Times photo by Shim Hyun-chul |
This is the first in a series of interviews with chairmen of Korea's major financial groups. ― ED.
By Park Hyong-ki
 |
With its huge war chest of more than 20 trillion won ($18 billion) in cash, the group will seek targets on the same or a similar scale as the deal it sealed to acquire ANZ Bank's retail operations in Vietnam last year.
"The group will search for opportunities like the ANZ deal that spurred Shinhan to become Vietnam's top foreign-invested bank," Cho said in a written interview with The Korea Times.
"We will pursue deals by comprehensively assessing the growth potential of the markets and our businesses as part of the group's inorganic growth strategy."
The group is particularly eyeing Asian emerging markets including Indonesia and India, while further fortifying its Southeast Asian base in Vietnam.
Shinhan Bank made inroads into Vietnam in 1993. Shinhan Bank Vietnam has total assets of $3.4 billion, with 1.1 million customers using its services there, the Korea Federation of Banks said. The group has 19 overseas subsidiaries, according to its semiannual financial report.
It will also aggressively seek targets here. Shinhan Financial is currently in talks to acquire ING Life Insurance from MBK Partners, a local private equity giant.
Market analysts expect the acquisition could cost the group more than 2 trillion won. Shinhan Financial has been issuing a series of hybrid bonds both at home and abroad. Some of the capital it raised through such bonds could be used to finance its future deals, said a source familiar with the matter.
Cho added the group will move forward with a "two-track strategy" focusing evenly on growing its bank and nonbanks organically and inorganically abroad.
The strategy would not only have to help the group generate synergy among its subsidiaries, but also help it "develop, upgrade and strengthen its business model that can best fit the local market environment."
It is especially seeking to push the group's nonbanks such as credit cards, investment banking and insurance to advance overseas under its organic roadmap, Cho said.
This is part of the group's efforts to generate 20 percent of total net profit from its overseas business by 2020, up from the current 13 percent.
Early last year when Cho was inaugurated as the Shinhan chief, he introduced his "2020 Smart Project" vision for the group.
This includes putting the "Global One Shinhan" strategy into action.
Besides maximizing synergy among its banks and nonbanks, Cho told The Korea Times that the group will seek to "balance growth" between its bank and nonbanks overseas by developing new business models and differentiated services.
"This mid-term goal is aimed at generating value that can help develop Shinhan's global systems and enhance its capability for sustainability," Cho said.
Digital transformation
The chairman said its two-track strategy also focuses on transforming Shinhan digitally from inside out here and abroad.
It inevitably has to consider deals and organic growth that not only boost synergy among its subsidiaries globally, but also ones that can lead them to change their organizations and business models for the new digital age.
"Our digital transformation is about reinventing our existing business model and coming up with a disruptive one by using various digital technologies and focusing on our customers' needs," Cho said.
To this end, the group has established the Shinhan Digital Innovation Institute (SDII) with 140 employees who research, test and create new business models that can disrupt the market with technologies such as artificial intelligence, blockchain and big data analysis.
Cho added Shinhan, obviously, cannot do this alone, stressing the importance of forging an alliance with players beyond its traditional sector.
"We see startups developing convenient services with financial technology not as our competitors but our partners," he said.
The chairman noted the group also has Shinhan Futures Lab where it is seeking to create value through cooperation with those startups by addressing their needs in investment and business model implementation.
To transform itself digitally, Cho said the group and its subsidiaries also need to embrace the culture of failure and redemption.
"We are changing our culture where we let people know it is okay to fail and where they can test (their ideas)," he said.
![[ANALYSIS] Pandemic awakens demand for data-driven automation](https://img.koreatimes.co.kr/upload/thumbnailV2/2b05d621a193420abef7ee24b95eab3d.jpg/dims/resize/178/optimize)
