Road to China

Hana Bank buys large stake in Jilin Bank to achieve its plan to build “North Asian Financial Belt”

Hana Bank has successfully bought an 18.44 percent stake in Jilin Bank in Jilin, China, for $316 million after a year of tough negotiations with the officials of the Chinese bank, Hana bank announced recently.
Officials of the bank said an agreement to take over a stake in the Chinese bank was signed in August, but the actual investment was delayed due to problems created by the global economic crisis.
They said Hana will pay $316 million for the stake next month by participating in the Chinese bank’s capital increase, pending an outcome of negotiations between financial authorities in Korea and China.
Hana officials said the bank has decided to go ahead with the investment plan as they felt the global financial crisis has been settling down and this is the right time to begin making overseas investments. The move is part of the bank’s strategy to build a North Asia financial belt extending from North China to Hong Kong to kick off its international advancement plan.
Jilin Bank was born out of the merger of three regional banks in China’s three northern provinces in October 2007 including the Commercial Bank in Jiangchun, the Commerce Bank in Jilin and Credit Co. in Liaoen City with 210 branches, the biggest in the region.
The bank’s stakes will be split among various investors. Private investors will hold a 6.24 percent stake, local governments will keep a 16.51 percent stake, and government-run companies will retain a 30.7 percent stake, among others.
Hana intends to cooperate with Jilin Bank in such areas as credit cards, electronic banking and international finance, among others.
Hana Bank opened its eighth overseas office, this time a representative office in New Delhi, India, in August last year with the aim of making India part of its Asian banking belt linking such countries as China, Vietnam and Indonesia. The bank currently has two wholly-owned overseas subsidiaries, four overseas branches and two overseas representative offices as part of its plan to make itself a global bank with a global banking network. The bank plans to expand into Confederation of Independent States countries, London, Dubai and other locations so that it will achieve its target of becoming a global financial group based in Asia under its long-term vision for worldwide operations.
The bank prepared for the opening of its New Delhi representative office by training staff picked for India through an Indian study group within the bank.
India has been relaxing its regulations for foreign businesses operating on the subcontinent since the 1991 economic reform, especially for financial firms setting up operations in India. There was expected to be a massive influx of foreign financial firms into the country following the March 2009 announcement of financial regulatory changes. Since March 2008, over 30 global banks set up shop in India including HSBC, Citibank, Standard Chartered Bank and others.
Hana officials said the bank plans to turn the representative office into a branch as soon as possible to cater to Korean firms and local companies in India.
President Kim Jung-tae said the bank will try to improve its portfolio and make its credit risk management more thorough to cope with the current economic crisis by fully utilizing its experiences and know-how in handling the 1998 financial crisis, the 2003 SK global incident and credit card problems that visited the bank and were turned into opportunities.
The CEO went on to say that the bank will try to be a market-friendly one in response to customers’ support and expectations to upgrade its value as a financial firm.
In the meantime, Hana Bank has been named the best private bank in Korea by Euromoney for this year, winning the honor for five consecutive years.
The reputable financial magazine started its survey of private banks around the world in 2004 to make its readers aware of how the private banking sector is doing, especially in the emerging countries, and announced the list of best private banks by country. UBS was picked as Best World Private Bank this year and other large global banks such as Citi, HSBC and Societe General won best private bank honors for their countries. nw

President Kim Jung-tae, right, of Hana Bank shakes hands with President Tang Guoxing of Jilin Bank in Jilin, China, after signing an agreement on Hana Bank’s acquisition of the Chinese regional bank in July in Jilin.