Global Operation
as New Growth Engine

Shinhan Bank to take over a Russian bank, set up subsidiaries in Kazakhstan, Uzbekistan

Shinhan Bank signed an MOU with the Financial Commercial Standard Bank(FSCB) to take over the Russian bank in due course, the bank said recently.
The bank said the signing took place during the 41st Asian Development Bank annual meeting held in Madrid, Spain, May 5 between executives of the two banks including President Shin Sang-hoon and head of the Russian bank.
Shinhan Bank officials said they expect the MOU will shorten the period for their bank to advance into Russia for banking business, especially in the area of retail banking which has been growing 90 percent in annual average in recent years.
Shinhan plans to engage in other areas of banking, too, taking advantage of the Russian bank's financial network in Russia targeting at Korean business firms and individuals in Russia and investment banking to become a leading bank in the host country, whose economy is vibrant with oil money.
The officials believe that Shinhan's international reputation , banking expertise and risk management know-how will be of great help in taking a leading position in the financial market in Russia, when they are mixed together with those of the FSCB after the merger.
They said Russia has rigid regulations for foreign banks to operate in Russia. A foreign bank has to operate its office in Russia for two years before becoming eligible to set up a local subsidiary. The foreign bank is required to wait for two more years to engage in retail banking.
Foreign banks have been taking over Russian banks to cut the time required to operate in the Russian financial market for this reason, rather than setting up subsidiaries.
FSCB, although a small bank, has been getting audits in the standard of IFRS, making its accounting transparent and it operates many money exchanges and cash depository facilities in Russia.
Shinhan has been making a substantial progress in its international operations since last year. The bank set up a wholly-owned subsidiary in Cambodia called Shinhan Khmer Bank. In Atlanta, Georgia, in the United States, the bank acquired NANB, set up a branch in Beijing and in Vietnam making its global operation as a new growth engine.
Shinhan clinched a license to set up a wholly-owned subsidiary in Kazakhstan in January for the first time for a Korean bank. The bank got an approval to set up a bank in China from the Chinese financial authorities on April 23.
The bank is scheduled to hold an opening ceremony of its bank in China and a reception in Beijing June 2.
Shinhan Bank's advance into Russia is to be taken as a signal for the bank to make inroads into the financial markets in resources-rich countries as the bank plans to set up banking operations in Kazakhstan and Uzbekistan.
Shinhan wants to take advantages of the rising financial business opportunities as many Korean firms are expected to converge on those countries, especially, construction companies, to do business as those countries have to build infrastructure, highways and other large projects to tab their natural resources.
The officials said the financial markets in those countries have been growing at a rapid pace in line with the economies of those countries, and further opening their financial markets, giving advantages to foreign banks that entered those financial markets early the possibilities to grow faster to enjoy fruits of success of localizing their operations.
Shinhan aims at launching its local banking subsidiary in Kazakhstan in August under a strategy to become the first Korean bank to operate in the Central Asian country, introducing advanced financial services in the host country.
Kazakhstan has the 9th largest territory in the world rich in such natural resources as oil, gas, uranium, gold, copper and iron ores with its economy growing nine percent on average annually.
Uzbekistan is also rich in natural resources as the 9th largest natural gas producer in the world and a big exporter of cotton. nw

President Shin Sang-hoon of Shinhan Bank