Securing FX Funds Important to Banks

Pres. Shin says Shinhan Bank to give priority to securing foreign exchange loans this year and help firms that can survive

President Shin Sang-hoon has long been known for new ideas for the banking industry. He recently came up with the idea of paid positions for college graduates as banking trainees at the Financial Research Institute in order to learn the banking business while earning a proper monthly salary. He said the idea is still being kicked around, but it certainly would help solve the unemployment situation for young people. Shin is full of ideas and is always ready to unveil them when they are needed. He came up with the idea of the financial creditor group for construction companies experiencing a financial squeeze.
The Shinhan Bank CEO is a veteran at his job and the banking community listens to him whenever he talks about important financial issues.
Shin said he came up with the idea of a banking group signing an agreement with large construction firms so that small subcontractors in financial trouble can get loans. But, unfortunately, the restructuring issue came out first, he said.
Shin should know practically every phase of how a bank should operate in order to be successful. He joined the founding member of Shinhan Bank in 1982 and held various positions including fund manager, business department head and other key positions before rising to head the bank. His current term as top manager of the bank expires in March.
He said banks will provide funds to construction companies that can survive from the current economic crisis with only a little financial help, meaning that companies that are able to earn cash through their operations should enter the survival program immediately.
Owners of those companies should let others run the business and not hold the reins of control too tightly. He feels that owners of SMEs are especially prone to such tendencies, always fancying that their companies will do all right some way or another. Therefore, others should step in and cut off those that have to be cut off. "You have to cut open the boil and treat it so that new skin can grow," he said.
A bank should not spare such efforts on businesses along with restructuring efforts; If owners show positive attitudes even if their companies face certain bankruptcy, banks should help those companies.
On government offers to buttress bank capital, Shin said he would not go for it in January, judging from the soundness of the bank, although the government said banks can do it either in January or in June. "We have to see how the loan defaults will occur following the restructuring of corporate borrowers in the second half. If sour loans expand, the bank will have to inject funds to build up its capital base, preferably with its own funds, if not, with government funds," Shin said.
On concerns about government interference with banks, if they borrow government funds, he said it is natural that lenders would interfere with banks' operations, as it has the rights to do so. "If you don't want government interference, you should not use government funds," Shin said.
Shin also said interest rates on short-term foreign exchange loans from overseas are still high, and the conditions on mid-to-long-term loans from overseas have yet to improve and would not for quite a while. In this connection, Shin said, it is critically important that banks should make efforts to secure foreign exchange funds now, rather than spending time talking about government guarantees on foreign exchange loans.
Regarding synergy in the merger of LG and Shinhan Credit Card companies, he said the bank secured several million deposit accounts of LG cardholders, which he said is a synergy because the bank can use the funds at low interest rates.
The CEO said the bank conducted the volunteer retirement system but will never do it again while he is the CEO, although the bank will trim its operation. The exchange of personnel between branches and the head office will take place often to find talented staff and put them to work to develop their particular strengths. He proposed the trainee program at the Financial Research Institute to give the opportunity for employment to college graduates and get them properly trained in banking, including in such areas as sales of funds and other special fields, while earning salaries in a bid to expand employment for youths. nw

President Shin Sang-hoon of Shinhan Bank.