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| © 2017 Euromoney |
| Full results |
Awards for Excellence 2017
No merger is easy, but the combination of Hana Bank and the former Korea Exchange Bank to form KEB Hana faced more challenges than most. KEB has been a troubled asset for more than a decade, with suitors from DBS to HSBC all deterred or rejected over the years. It was sold by US private equity firm Lone Star to Hana in 2012, but it took three more years for Hana to strike an agreement with KEB’s powerful union on a merger between the two institutions.
Then came integration – no mean feat, even with the unions safely onside. Insiders say the process was turbulent, but somehow it was completed ahead of an original schedule of 2017. Instead, integration was officially done in 2015 – although a truer sense of completion came with the integration of the IT systems of the two banks in June 2016 – and the result is the largest bank in Korea by assets.
“They deserve credit,” says a senior banker in Korea. “Hana was a no-name bank, number five or number six. But they acquired KEB and established themselves as the major bank in Korea.”
| Mr. Young Joo Ham, KEB Hana Bank |
Doing so required blending two very different cultures, but it was helped by the fact that there were clear synergies from the outset. Hana Bank’s strengths were in asset management and private banking, while KEB had an edge in corporate finance and foreign exchange. Between them they had an overseas network of 126 locations (now 144) in 24 countries. The bank expects to make W300 billion ($265 million) in synergy-related savings over three years.
It is only now that we can look at the bank in aggregate and see how it is doing. Year-on-year pre-tax profits were up 35.8% in 2016, while the cost-to-income ratio fell 3.5 percentage points and the NPL ratio was cut by a quarter. These are like-for-like comparisons, as the 2015 numbers involved both sides of the bank.
Moreover, there is now a clear sense of a single bank moving forward with a plan. With a unified risk management plan, the bank has reduced exposure to larger companies and strengthened its balance sheet. It is also moving forward with fintech innovation. Hana was always strong here, offering Korea’s first mobile banking service in 2009 and the first electronic wallet in 2012. Now a new cell has been set up to implement digital strategy bank-wide. A new online virtual channel was launched in March 2017, among many other initiatives.
The merged bank’s ambitions are global and it seeks to have international business account for 40% of group profits by 2025. It is busy from Mexico City, where it is turning its rep office to a subsidiary, to Gurgaon in India, where it has opened a branch. It is also an active investor besides, putting equity into a reinsurance company in Singapore and an asset management company in China during the awards period.
