Hana Aims at Being the Best
Pres. Kim stresses management centered on field units for quality of assets
President Kim Jung-tae of Hana Bank
President Kim Jung-tae of Hana Bank said "Into Customers, Future Together" is the key phrase for Hana Bank's operation strategy this year, a step forward from "Jump Together," the key strategic phrase for last year.
Hana Bank won the Gold Award at the 20th Dasan Financial Grand Award for its excellence in the commercial banking sector, particularly in the retail banking area. The citation noted that the bank won the Best Private Bank award from Euromoney for six years in a row from 2005 with its advanced risk management. The citation also cited the bankOs intensive social contribution by operating the Hana Care Center for senior citizens, the Hana Pruni Children's Home for homeless children and the Hana Miso Finance Foundation to provide financial loans to low-income people.
The CEO said the strategic phrase means that Hana Bank will be the best solution provider who can satisfy the inner needs of its customers. Under the strategy, the bank will expand its customer base and become a truly leading bank in Korea, Kim said.
Kim said the crux of his management policies is to reorganize the bank's set up to a matrix form this year, which means that the management system will be like a "go" game table, unlike the traditional vertical setup with a horizontal one added.
Under the reorganization, the retail business group has been changed to the customer support and the marketing promotion groups. The bank now has three regional groups on the top of the vertical order with the customer support group, which has four departments including retail, the SME SOHO and the Private Banking groups.
CEO Kim said this year, under the new matrix set up, the regional head offices will consult with the support groups to decide on new loan products, unlike in the past when the head office would make decisions on new financial products and branches would sell them.
But from now on, the jobsite information will be considered when developing new financial products under the matrix system from development to the final stages.
Kim also said the bank will go for quality, not quantity, this year through its regional headquarters, solidifying its operations more tightly. Hana now has 11 million customers including customers of Korea Exchange Bank (KEB), which Hana took over at the end of last year. Hana bought a more than 50 percent stake of KEB for 4.7 trillion won from Lonestar Fund, a U.S. hedge fund that bought the stake during the financial crisis in 1998.
Hana Bank became the third largest bank after the takeover of KEB, surpassing Shinhan Bank and following Kookmin and Woori banks. Kim wants to run the bank with a focus on the quality of its assets in order to be a leading bank among the top four.
Hana Bank has decided to pay a dividend of 1.98 trillion won to Hana Financial Group to help pay for the cost of the stake in KEB. CEO Kim said Hana would not keep its BIS ratio above the 13.4 percent line and the basic own capital ratio at more than 10 percent. He said if capital is reduced the ROE expands, boosting the capital effective rate.
Kim said many banks expanded their capital funds with the regulations on capital strengthened during the financial crisis, some very excessively. Hana, too, increased its capital by 1.5 trillion won through the issuance of bonds by the holding company, the dividend payment of which can be looked upon as normalizing the capital account, he added. The CEO projected that the bankOs income would amount to some 1.2 trillion won this year, up from 1 trillion won last year.
Kim also said the share price of Hana Financial shares would be up as it has a lot of room for growth when looking at the PBR, which stands at 0.85, but should rise to as much as 1.2 during the year.
With regard to KEB's operation, Kim said the bank will continue to operate independently to avoid confusion among its customers and keep its own competitive strength as guaranteed by law. He said KEBOs branches wonOt be reduced or closed, since all of them show a profit and not many of them are redundant with those of Hana Bank.
Down the road, there will be moves to merge the two banks' corporate culture and organizational set up to let employees of the two banks understand each other better. A personnel shake-up would also disregard where they came from, as it will be based on the principle of assigning the right people to the right positions.nw