For a Larger Market Presence

Shinhan Financial Group aims at market dominance by having LG Card taking over Shinhan Card

LG Card will take over Shinhan Credit Card to become the biggest credit card company in the country as of October 1, Shinhan Financial Group (SFG) officials said.
They said board of directors of both financial companies approved the deal in which LG Card will take over its Shinhan Card's operations, paying 1.556 trillion won. Both credit card operators are affiliates of Shinhan Financial Group and the merged credit card company will be among the 10 largest credit card operators in the world in terms of transaction and money handled.
Shinhan Financial Group initially wanted to have LG Card operate independently for two years when it took over the company. But the holding company wanted to eliminate the inefficiencies from redundant operations with Shinhan Card and look for synergy effect from the merger, explained the officials about the largest transaction in the credit card industry.
The new LG Card will have customers totaling over 13 million, about 75 percent of the credit card holders in the country, and cash or other transactions amounting to some 71 trillion won annually, about a quarter of the total credit card market.
Before the integration is realized, Shinhan Financial Group plans to buy LG Card shares held by creditors and small shareholders, which come to about 21.4 percent of total outstanding shares so that Shinhan Financial Group will own 100 percent of LG Card.
The buyout period would be from June 14 to July 3 at per share price of 46,392 won and the holding company would pay 830 billion won to buy 17.892,82 million shares or 14 percent of total outstanding shares and payment will be made on July 6, SFH officials said.
Shares not sold would be exchanged with shares of LG Card on September 21 by the ratio of 0.83932 Shinhan Card share for one LG Card share.
The brand name for the new card operator has yet to be decided. It would be either Shinhan or a name to be decided later. An outside consulting firm is being commissioned to help with making the naming decision.
In the meantime, the regular board of directors meeting of SFH approved the appointment of Choi Bum-soo, vice president of Korea Individual Credit Information Co. as vice president of SFH and also approved the reorganization of SFG into having three vice presidents, 2 directors and 11 teams.
The new vice president obtained his doctorate degree in economics from Yale University and worked for a time for the Korea Development Institute. He then worked for Kookmin Bank as head of the strategic planning. He became the first outsider to be hired as vice president for SFG.
The number of vice presidents has been reduced to three from four under the reorganization. Vice President Choi will be in charge of strategy, Vice President Lee Jae-woo in charge of management and Vice President Yoon Jae-woon will take charge of synergy among affiliates.
To give more professional expertise to the synergy and strategic sectors, the group hired a director each under the sectors on an annual contract basis. The group also reduced the number of existing teams to 10 from 12, but also decided to add a support team to take charge of the integration of card operations.
SFG officials said the non-banking sectors of the group have been strengthened to cope with the growing importance of non-banking business in the financial industry with the pending legislation of the capital market integration law, among other changes in the industry. Hiring an officer from outside the group is also part of the strategy to cope with various changes and to provide transparency in the financial industry down the road. nw

LG Card President Lee Jong-ho.