Shifting into a
Higher Gear of Operation

Shinhan Financial Group sees affiliates overcoming various obstacles

The Shinhan Financial Group has been right on the mark in its move forward to become a global financial group with its affiliates in the financial industry doing all they can to achieve their operational targets for this year.
One of the busiest among its affiliates has been Shinhan Bank, a major affiliate in the group with assets totaling over 300 trillion won, the second largest among banks in the country after Kookmin Bank.
Shinhan announced on June 30 that it had successfully issued residential mortgage backed securities (RMBS) in Hong Kong worth $670 million with fixed interest mortgage loans as the base assets. Moody's gave the RMBS an "Aaa"credit rating, bank officials said.
The RMBS were issued in two currencies, U.S. dollars and Hong Kong dollars. The securities issued in U.S. dollar amounted to $500 million and those in Hong Kong dollars totaled HK$1.3 billion. They were converted into Korean won and used to increase its loan funds.
The cost of funds stood at the CD-50 basis point level,
0.9 percent lower than funds borrowed by issuing bank bonds The lower cost was due to Shinhan Bank's taking advantage of its currency swap facilities with international banks so that it can borrow funds at lower costs.
The financial deal was the largest among funds borrowed by banks in overseas capital markets and at the lowest cost so far this year.
The deal is thought to have played a positive role in calming domestic banks'concerns about a foreign currency liquidity crisis due to the U.S. subprime loan crisis and has also boosted the confidence in Korean banks in general.
The deal was finalized at a ceremony at the Westin-Chosun Hotel in downtown Seoul on June 30 where President Shin Sang-hoon signed the instrument for Shinhan Bank and President James Lau signed the document for Hong Kong Mortgage Corp. (HKMC).
Bank officials said the bank secured overseas strategic investors and a means to finance funds for stable growth through the deal. It also showed that Korean banks can always borrow funds from overseas when funds are difficult to secure at home at lower costs and from diverse sources. It also has significant meaning in that a Korean bank was able to secure such a large amount of funding at a time when financial markets both at home and overseas were having a tough time due to the U.S. subprime mortgage loan problems.
They said the bank will try to provide better financial services to its clients by continuing to issue convertible securities both at home and abroad, now that the bank has successfully borrowed funds from overseas by issuing RMBS.
In the meantime, President Lee Dong-girl of Good Morning Shinhan Securities Co. met with Laotian Prime Minister Bouasone Bouphavanh on June 23 in Seoul. The Laotian prime minister took time out from his busy schedule in Seoul to meet with President Lee because Good Morning Shinhan Securities is the only Korean securities firm to be a consultant on the Laotian economic development policies, as the company signed an MOU with the Laotian Investment Authority in March 2007. The securities firm made an investment in a project to produce a raw material for biodiesel as its first investment project in the Southeast Asian country.
Shinhan Bank, in the meantime, opened a branch in Shanghai, its sixth in China, on June 30. The new branch held a subdued ceremony in consideration of the Sichuan earthquake with only 30 people attending including Korean Consul-General Kim Jong-ki in Shanghai and a number of local Chinese officials.
The branch is located in the Pusi area, where many Koreans live, and the Korean consulate is also located in the area, along with offices of many Korean firms doing business in Shanghai.
The branch aims to cater to Korean businesses and local businesses under the bank's customer satisfaction management ideal.
The branch is the first one opened since the establishment of Shinhan Bank China Ltd., a wholly-owned subsidiary in China. Shinhan plans to open three more branches this year in China; one each in Wushi, Qingdao and Tianjin. nw

A view of the Shinhan Financial Group building in downtown Seoul.

President Lee In-ho of the Shinhan Financial Group.