Ra Eung Chan takes a pragmatic approach to managing Shinhan Financial Group Co. “It’s important to make the right decision,” the 71-year-old chairman says, “but it is just as important to be flexible and make a quick shift in your direction.”
Ra has certainly shown agility in his nine years at the top of the group. His willingness to pounce on opportunities helps explain Shinhan’s rise as a leader in the consolidation of South Korea’s financial sector in the aftermath of the Asian crisis in the late 1990s. Shinhan acquired Good Morning Securities in 2002, agreed to buy Chohung Bank in 2003, a deal it completed three years later, and then in 2006 snapped up LG Card for $7.5 billion in what was then the country’s largest takeover. Those deals “have elevated our asset size as well as profitability,” he says, “and investors and analysts have taken notice.” Although the company trails slightly behind rivals KB Financial Group and Woori Finance Holdings in assets, its $15.6 billion market capitalization is easily the biggest of the three.
Ra joined Shinhan Bank at its founding in 1982 and rose to become president in 1991 and vice chairman in 1999. He attributes the bank’s success to its culture as a relative upstart not beholden to the chaebol ties that dominate much of the Korean economy, even if the bank does lend to such big conglomerates as Samsung. “We focused on retail banking,” Ra explains. “We emphasized customer satisfaction in an environment where existing banks cared not for feedback from customers.”
With businesses ranging from retail banking to credit cards and securities brokerage, Shinhan is an exemplar of the universal banking model that dominates the Korean landscape today. Diversification didn’t protect Shinhan from the sharp recession that hit Korea in the first half of 2009; the group’s net income dropped 34.4 percent last year, to 1.3 trillion won ($1.1 billion). But strong risk management helped Shinhan minimize the rise in nonperforming loans, and the bank has profited handsomely from the economy’s recovery. Earnings jumped more than sixfold year-over-year in the first quarter, to 779 billion won.
Ra sees a “new normal” that consists of “tougher regulation and slower growth.” Shinhan will still be on the prowl for opportunities, though, and may join other Korean financial firms in venturing abroad. Says president and CEO Shin Sang Hoon, “especially in other Asian markets, we might seek acquisition opportunities or joint ventures to gain early traction in those markets where we have little or no presence.”
Return to the index and article, Asian Financiers Flex Their Muscles.
Click here to view the complete rankings of the Captains of Asian Finance.
