Shinhan Financial Group is in the final stage of negotiations to acquire a consumer financial firm worth 100 billion won (US$88.81 milion) in Indonesia. An official from Shinhan Financial said, “We are promoting the acquisition of a local installment financing company to create a synergy in our business in Indonesia.”
Shinhan Financial is seeking to take over the Indonesian capital firm to respond to the explosive growth of the local installment financing market. The Indonesian new car and motorcycle market are worth 1 million units and 6 million units, respectively, a year. Indonesians use installment financing to purchase a new car or motorcycle. In particular, the number of registered motorcycles comes to 115 million units, accounting for half of the total population.
Shinhan Financial is planning to aggressively push into the installment financing market in cooperation with Shinhan Indo Finance, a subsidiary of Shinhan Card Co. which already runs business in the local market.
The group’s flagship subsidiary, Shinhan Bank Co. first entered the Indonesian market in 2016 but it depends on corporate financing for more than 90 percent of its business. The group’s another major subsidiary, Shinhan Card, established a joint venture called Shinhan Indo Finance with Indonesia's Salim Group and started credit card and installment and lease financing businesses there but the company is suffering from a loss. This is why Shinhan Financial is seeking to strengthen its business power in Indonesia by creating a synergy between Shinhan Indo Finance and the new capital company to be acquired.
Shinhan Financial has been pursuing an aggressive M&A strategy after announcing the “2020 Smart Project” last year. The group aims to raise the proportion of overseas profits to 20 percent by 2020.
Shinhan Bank Vietnam Ltd. has become the largest foreign bank in Vietnam with total assets of US$3.3 billion (3.72 trillion won) and 900,000 customers. It acquired the retail sector of ANZ Vietnam and is expanding its credit card business based on revolving products.
Shinhan Card received final approval last month from Vietnamese financial authorities for acquiring a 100 percent stake in the consumer financing division of Prudential Vietnam Finance Co. (PVFC), the fourth largest in the industry, for 161.4 billion won (US$143.34 million). Shinhan Card will begin business under a new company name in the first half of the year and will target the Vietnamese consumer financing market, such as credit loans, auto loans and credit card.
Meanwhile, Shinhan Financial has been named the country's best financial brand by The Banker, a world renowned financial news magazine, and 67th worldwide among the world's top 500 financial brands in 2019. KB Financial Group, which ranked No. 1 in South Korea last year, has taken 71st place this year.