Preparing for Tsunami From European Debt Crisis

Preparing for Tsunami From European Debt Crisis

Chairman Han Dong-woo of Shinhan Financial Group said it is not a sure thing whether or not the group can sustain its pace of recent growth this year, even with the stellar results of last year.
"If our export industries falter due to a global slowdown, it is inevitable that the locomotive of the Korean economy will lose steam," he said in his New Year's address.
"Also," he said, "the geopolitical situation on the Korean peninsula is precarious due to the death of North Korean leader Kim Jong-il, and thus uncertainties in North Korea are higher than ever before, although it may not be a sudden regime change, such circumstances are unfriendly to the financial industry."
The chairman also warned that financial regulations are getting stricter because of increasing demand on financial companies for social contributions, affecting the profitability of each business unit.
Han said the group's strategic goal for this year has been dubbed the "New Revolution," focusing on three major initiatives. "First, we need to secure solid organizational competencies and utilize them effectively," he said. "If an organization fails to secure a sound business platform and stable profitability, the foundation will be easily shaken by small shocks and will lose opportunities to adjust itself to the shifting environment. We must undergo a continuous overhaul to secure a certain cushion against external shocks.
"Second," he said, "we must push ahead with multi-convergence capability management. In times of difficulties, we are well aware that amongst visible threats there also lie opportunities for us. With the growth rate of the financial industry slowing down and environmental and technological changes becoming more rapid, customer needs for sophisticated and differentiating financial service are escalating. We must organically combine internal competencies, and at the same time create new values by utilizing our external network so as to allow Shinhan Financial's next phase of growth.
"Third, we must pursue a compassionate operation that emphasizes our social responsibility."
In the meantime, President Suh Jin-won of Shinhan Bank said he will push "warm banking" in managing the bank's operations this year, which will be aimed at upgrading the bank's brand image.
Suh said "warm banking" is the new motto declared by Chairman Han Dong-woo of Shinhan Financial Group last year, designed to help financially troubled businesses and individuals by seeking them out before they come to the bank, with SMEs the most important group to give support.
From Jan. 1, Shinhan Bank has taken measures to cut the interest rates for SME borrowers and long-term corporate borrowers by 0.5 percent as per the motto meant to strengthen the bank's ties with its customers by helping borrowers during difficult times as a bank should.
Under the CSP program, the bank has been extending the maturities of loans borrowed by businesses suffering difficulties and offering preferential interest rates and other support for their survival. The bank also added to the program the provision allowing the bank to turn loans into investments if borrower firms have tough times financially.
The bank's top management priority is to tighten its operations rather than expanding profits. The bank aims to expand its assets by 5 percent this year and projects to around 2 trillion won in net profit without much trouble since its assets are considered to be the healthiest among Korean banks.
The bank will also strengthen its tie-ups with its affiliates such as Shinhan Asset Management in such areas as private banking and corporate investment banking in addition to expanding its overseas operations, particularly in Indonesia. nw

Chairman Han Dong-woo of Shinhan Financial Group.

A view of Shinhan Bank head office building in Namdae-mun-ro near South Gate in downtown Seoul.