Big Deal Nears Conclusion

Chmn. Kim certain to be retained to serve 3rd term to finalize takeover of Korea Exchange Bank

Chairman Kim Seung-yu of Hana Financial Group feels that the group’s take over of Korea Exchange Bank will soon be finalized with all of the fund (about 5 trillion won) for the takeover secured and he is all but certain to be retained to serve his third term as chairman.
Hana is now awaiting the financial authorities approval for its move on the KEB that includes its agreement with Lone Star Fund of the United States to take over its stake around 51 percent in the KEB consummated at the end of last year in London where the U.S. hedge fund has its head office.
To help bring the move to close to conclusion, the Fair Trade Commission cleared Hana Group’s deal to take over the KEB on March 10 with a statement that the move would not harm the fair trade among the financial institutions, mainly its rival banks in Korea, the commission said in its notification to the Financial Services Commission. The FSC requested the FTC if Hana’s move limits fair competition among banks in Korea subject to Article 17 of the Financial Holding Company Law.
FTC said it analyzed the impact of the bank merger on the financial market examining the 23 financial products that both Hana Bank and KEB handle, but FTC came to a conclusion that they don’t limit the competition in the financial market.
On November 25, Hana Financial Group officially announced that it had signed a share purchase agreement with Lone Star in London, U.K., to acquire shares of Korea Exchange Bank (KEB).
Hana Financial Group’s Chairman & CEO, Seung-Yu Kim, and Lone Star’s Chairman, John Grayken, signed the share purchase agreement for Hana Financial Group to purchase 51.02% of Lone Star’s KEB shares at 14,250 won per share. This amounts to a total of 4 trillion 688.8 billion won.
As a result, Hana Financial Group has emerged as Korea’s third largest financial holding company, with total assets of 316 trillion won. It is expected to develop into the world’s fiftieth largest global top-class financial group by 2015. In so doing, the Group intends to surpass the big four banks, which has been reorganized in Korea, by developing a synergy between Hana Bank’s private banking (PB) and KEB’s corporate banking (CB).
To achieve this, Hana Financial Group will first secure an economy of scale based on an expanded infrastructure. Also, its business portfolio will be further strengthened by increasing its market share based on the merits of the two banks so as to secure first or second position by business area.
Due to the recent share purchase, the local channel owned by Hana Bank and KEB has grown to 1,044 branches, second only to Kookmin Bank, while its overseas channel has increased to 38 branches, which is the largest overseas network of the top four domestic financial institutions. Based on this expanded network, Hana Financial Group will secure an economy of scale through consolidation, such as reducing the total costs of funding.
Hana Financial Group plans to maximize synergy by combining the know-how of KEB’s CB, export and import business, and overseas branch network with Hana Bank’s PB, personal finances, asset management, insurance and securities sections. In particular, the Hana Financial Group will strengthen the merits of the two banks: foreign exchange and import and export trade finances combined with private banking to become Korea’s top bank. Also, it will increase its dominance in the consumer finance market by expanding its credit card and capital sections, including Hana SK Card and KEB Card.
Hana Financial Group, as a basic principle, will implement integrated management in the future. It will secure independent bank management by keeping the two banks under the umbrella of Hana Financial Group. Also, it will maintain the current name of KEB in consideration of the high degree of customer loyalty enjoyed by KEB bank’s independent brand.
Additionally, there will be no artificial restructuring because the overlapping branches and business areas are small. Since the current level of branches is needed to maintain the current customer base and expand the service, the sales force will be maintained at the current level.
A person concerned of Hana Financial Group announced, “As a result of our recent purchase of shares, the strengths and know-how of Hana Financial Group and KEB will be mutually exchanged. This will upgrade the overall quality of the financial services in all business areas, including corporate banking, foreign exchanges, personal finances, private banking, etc.” nw

Chairman Kim Seung-yu of Hana Financial Group.

Photo by courtesy of Hana Financial Group