Shinhan Bank Expands into Japan

Bank realizes dream of its investors to launch operations in Japan

Shinhan Bank has set up a wholly-owned subsidiary, Shinhan Bank Japan (SBJ), in Japan. President Lee Baek-soon said that the bank has been working to launch the subsidiary for a long time and acquired approval from the Japanese financial authorities in line with its plan for the new bank to start operations from the third quarter.
Shinhan will invest 280 billion won (20 billion yen) in the new Japanese subsidiary, which is only the second wholly foreign-owned bank in Japan after Citigroup, CEO Lee said. The bank also designated Japanese banker Satoru Miyamura, 62, to be the first president of its Japanese subsidiary. He worked for the Japanese Finance Ministry and has extensive international banking experience having been a Japanese representative at the World Bank and a counselor at the Japanese representative office at the OECD. A graduate of Tokyo University with a law degree, Miyamura received a Master's degree from Harvard University Law School.
Lee said Shinhan Bank, set up in 1982 with investments by Koreans in Japan, has grown big enough to be among the four largest banks in Korea and now has expanded its operations to Japan. The bank set up branches in Osaka in 1986 and then in Tokyo and Fukuoka, catering to Korean residents and Korean businesses in Japan. Shinhan branches' total assets amounted to 154.6 billion yen as of March, including 105.6 billion yen in loans with most of the loan funds borrowed from its parent bank in Korea.
SBJ will take over the three branches and secure funds in Japan and cater mainly to Japanese customers. Manager Park Joong-hun of the Tokyo Branch said SBJ will try to attract deposits from Japanese customers and make loans with the deposit funds instead of borrowing funds from the home office in Seoul. He also said the significance of the bank's move is that Korea has become the first to set up a wholly-owned bank in Japan among Asian banks, which will have a big impact on Korea-Japan economic relations.
"Despite its relatively short history, Shinhan has stayed at the forefront of the Korean financial industry, and as the pride of the Korean financial industry, we have acted as a pioneer for opening up new frontiers in banking," the CEO said. "Based on Shinhan's solid strength, built up from past successes, we, the 13,000-member Shinhan family, aim to create a new formula for success that will create a strong and healthy bank that can withstand any crisis," Lee went on.
He said because of the global financial crisis, and consequent economic hardship, there is an enormous sense of uncertainty in the economic sphere. "However, we at Shinhan have prepared well in advance for the unfolding crisis. We are confident that we can weather the storm unscathed. Furthermore, the bank will aim to become a public-conscious bank to help our neighbors and society at large," President Lee said. "Within the bank, we would seek to improve our commitment to ethics management, and to the outside, we would try our utmost to meet the expectations placed on us so as to become a bank that earns the public trust and respect of our clients and society," the CEO said.
In the meantime, Shinhan Financial Group is on the verge of preparing a plan to strengthen its risk management system, especially the group's operational set up after the financial crisis is over, officials of the group said recently. They said the group has assigned the Boston Consulting Group to look at the financial group's risk management system including those for credit card, banking, insurance and overseas operations -- an overall aspect of the group's operations.
This is the first time for the group to assign an outside consulting firm to analyze its operations and receive consultations, especially on its risk management system.
This might lead to an overall shake up of the group's set up and risk management systems of affiliates and organizations, the officials said.
The central point of the checkup is the holding company overseeing the risk management of its affiliates with strong ownership. The crucial issue is how much control the holding company will have over risk management of its affiliates entrusted in the hands of a credit risk officer, they said. nw

President Lee Baek-soon of Shinhan Bank.

President-designate Satoru Miyamura of Shinhan Bank Japan.