Hunt for Russian Bank

Shinhan Bank, Macquarie agree to acquire a bank in Moscow together; Shinhan also to set up a bank in Cambodia

Shinhan Bank will set up a commercial bank in Cambodia 100 percent owned by the bank, financial sources said recently. The bank, in fact, signed a letter of intent with the local authorities in the southeast Asian country, which will be the first financial entity to be set up by a Korean bank overseas since the financial crisis in 1998.
Shinhan plans to apply for the approval to set up the Shinhan Khmer Bank from the Financial Supervisory Commission, which will be capitalized at $13 million, the minimum capital required to set up a bank in Cambodia.
Shinhan has decided to set up the bank alone without partners and later increase its capital in tandem with its growth under its plan to let it become a representative bank in Cambodia
Shinhan already operates a joint venture ShinhanVina Bank in Vietnam and plans build its banking network in southeast Asia linking the new bank in Cambodia. Shinhan is attracted by the business opportunities in Cambodia, whose economy growth has been averaged nearly 14 percent per year in recent years with the discovery of an offshore oil field. Many foreign banks have been rushing to set up operations in the country.
Shinhan officials said Cambodia has been undertaking many SOC projects such as roads, airports and harbors, requiring financing to cope with its economic development spurred by the newly discovered oil wealth. Consumer spending has been rising also due to increases in personal income for people in the country.
The bank plans to invest in SOC projects in Cambodia on project financing basis as opportunities roll along including airports, highways, and harbors. Shinhan has already provided $30 million in project financing to the project to build a new urban town. Shinhan also has been investigating opportunities to set up an office in Kazakhstan.
Shinhan Bank celebrated the first year anniversary of its merger with Chohung Bank on April 1, giving birth to a bank with over 177 trillion won in assets. During the initial year of operation, the merged new bank has concentrated on the integration of the electronic systems and organizations of the two banks to build a base for its rapid take-off with the of becoming a global bank.
The bank also acquired the LG Credit Card to expand its financial operation and maximize synergy among affiliates.
President Shin Sang-hoon said he would like to make Shinhan, the first among the banks in the country and expand its capacity to be among a world-class bank.
Shinhan Bank also has also decided to acquire a bank in Russia jointly with Macquarie Bank of Australia, the bank said March 26. Alan Moss, president of the Australian bank, visited Seoul to meet with President Shin and agreed on the matter in the form of joint investment in capital of a Russian bank to be acquired. The bank said the tie-up is based on a long-term cooperative relationship between the two banks in the form of the Shinhan-Macquarie Financial Consultant Co., set up in 2001.
Shinhan assigned a number of staff to its office in Moscow to continue to maintain the banking relations with Russian clients of former Chohung Bank, it acquired. Chohung operated its office in Moscow for a while and its experience will be an immense help to Shinhan's financial operation in the Russian capital.
Macquarie finds in Shinhan a tailor-made partner for the expansion of its overseas banking operations, especially, to Russia, drawing back from its experience of operating a joint-venture financial company in Korea. It already has financial operations in 24 countries including 10 in Asia alone and North America, Europe, Africa and the Middle East, employing some 10,000 employees.
Shinhan Bank will not fear to join with large private funds overseas and invest in huge infrastructural projects in the form of project financing said President Shin Sang-hoon during his interview with Korean reporters assigned in New York on February 20.
He said Shinhan is ready to participate in project financing for large social overhead capital projects overseas, which take some 20 years to collect invested funds. The bank has been considering joining large overseas private funds as Blackstone and others to participate in project financings.
He said the bank has been approached by a number of domestic financial companies and foreign private funds including Blackstone, the largest private investment fund in the world. But the bank has refused the Blackstone offer due to the projected return rate and other sensitive matters fell short of what the bank had in mind.
But Shinhan is open to any offers of joining in project financing if they are right for the bank and the bank expects any of one of those private funds including Carlyle, and others such as Kolberg, Klavis and Roberts to offer their terms for project financing. nw

Shinhan Bank President Shin Sang-hoon.