Transcript 지주회사 조직 개편의 필요성

Unique M&A Process
“NEW BANK / ONE BANK” Strategy
Shinhan Bank Case
Harvard Business School
Case Study 9-305-075
September 2007
The Asian Financial Crisis
1997, Dramatic Moment in Korean Financial History !
Damaged Korean
Financial Market
Financial Panic
(Thai Baht)
Contagion
• Currency Crisis
• Interest Rate Hike
• Liquidity Crisis
• Bankruptcy
• Insolvency
• Deterioration
• Recapitalization
• Consolidation
Asian Financial Crisis triggered M&A in Financial Industry
1
Bank Crisis ! A Brief History : 97~98’
2
Shake-up: Overcoming the financial crisis
1997
2006
Banks
33
18
Merchant Banks
30
2
Mutual Savings Banks
231
113
Securities Companies
36
42
Insurance Companies
50
50
Investment Trust
31
47
1,666
1,066
Credit Union
Total
2,077
Restructuring Banks
Branch : ∆ 20%
Employees : ∆ 40%
1,338
3
Banking Industry – Does size really matter ?
Progress :
Nationalized → Privatization →
1997
KB
M&A (restructuring) → M&A (growth)
2002
KB
H&CB
CBK
Hanil
Woori
Seoul
Hana
Hana
SHB
CHB
SHB
CHB
KEB
KEB
KorAm
KorAm
KFB
KFB
4
Shinhan needs sustainable growth
 2002. 9 : Government announced to sell CHB
SFG (Holding Company)
 2003. 1 : Preferred bidder status granted to SHB
 2003. 6 : SFG made agreement to buy CHB
10 subsidiaries
(As of 2003)
Securities
Card
Capital
(SHB)
 Established in 1982
(1st privately funded bank)
 4th largest bank ;
+
 Established in 1897
(the oldest commercial bank)
 6th largest bank ;
Investment Trust
Branch :358
Branch : 542
Juju Bank
Employee : 4,678
Employee : 6,686
Advisory
Customers : 5.7 million
Customers : 10.1 million
Asset : KRW 84 trillion (U$ 70 bio)
Asset : KRW 63 trillion (U$ 53 bio)
Income : KRW 774 billion
Income : KRW -195 billion
NPL : 0.82% / BIS CAR : 10.49%
NPL : 4.19% / BIS CAR : 8.87%
Insurance
Internet base Co.
Credit Information
 SME & High Net-worth Retail
 Corporate & Mass Market Retail
5
Integration Process in Reverse ?
Typical
Process
① Legal Integration
③ Full Integration
② PMI Period
※ Immediate Action (Shock therapy)
Shinhan
Case
② Legal & Full
① PMI Period
Integration
※ Avoid Troubled Marriage (emotional integration)
This Merger Challenges will be successful ? - Unconventional strategy
Shinhan’s case has been taken up as a model case study by Professor Rosbeth Moss Kanter
at Harvard Business School
6
Why unique process for Shinhan ?
 Difficulties in operating the integrated system
 Difficulties in harmonizing the two corporate culture
 Difficulties in integrating the separate labor union
 Difficulties in retaining the overlapped customers
 Changing needs of the market and customers
One Bank / New Bank Strategy : Dual Bank Period
Benefit of Holding Company Structure : Controller
7
One Bank/New Bank Initiatives – Vision Achievement
During “Dual Bank” transition period, SFG will achieve its vision through
ONE BANK/NEW BANK Initiatives
Goal
Integrated Financial Service Provider
“One Bank” initiatives
Integration
Process
Foundation
• Maximizing
synergies before the
actual merger
• Minimizing
emotional and
cultural barriers
“New Bank” initiatives
Three-year
“Dual Bank”
transition
period
• Upgrading current
operation and
capabilities
• Thinking and going
beyond banking
Financial Holding Company
8
Joint Management Committee
NEW BANK/ ONE BANK initiatives are in progress with joint
participation of SFG, SHB and CHB
Joint Management
Committee
External experts to
provide best practice
and advice as well as
to enhance
transparency and
objectivity in
decision-making
Advisory Group
Joint Work Groups
• Groups for working level
coordination between Shinhan
Bank and Chohung Bank
• Working level employees from
SFG, Shinhan Bank and Chohung
Bank participate
• Final Decision-making organization to provide
overall direction and leadership on integration
• CEOs from SFG, Shinhan Bank and Chohung
Bank participate
SFG’s Management
Support/ Integration
Team
• Main teams within SFG
responsible for integration
- Coordination between
Shinhan Bank and Chohung
Bank
- Managing upgrade projects
Upgrade
Project Teams
• Teams for planning and
implementing 20 upgrade topics
• Working level employees from
SFG, Shinhan Bank and Chohung
Bank and external experts
participate
9
ONE BANK Tasks and Performance Results
ONE BANK Tasks and Results in 4 Issues
Subject
•
Enhancing Customer
Services
•
•
Creating Synergies
through Co- Sales and
Co-Marketing
Performance Results
Task
•
•
•
Utilizing dual channel of SHB
and CHB
Standardizing the service quality
of branches
Uniform CI
•
IB Co-location
Joint operation among
closely located branches
Joint product development
& marketing
•
•
•
•
•
Standardizing and
Sharing
System and Policy
•
•
•
Joint procurement
Corporate Risk Mgt Alignment
Integrated Interest rate policy
•


•
Bridging
Cultural Difference
•
Joint events for staffs in same
management level
Combined Education and
training Session


Customers of each bank can visit either SHB or CHB branches:
Approximately 600,000 customers benefit from this service
Standardizing service process of two banks and providing joint
training programs
SFG CI included on the signboards of CHB branches.
Co-location of GMSH IB center with Investment Banking Dept.
of each bank
Closely located SHB and CHB branches can cooperate
in their operation such as joint partnership with real estate
agencies
CHB can sell products developed by SHB such as long term
mortgage loans
Inauguration of a joint procurement team in group level to save
additional expenses up to KRW30bn on a yearly basis
Reconciliation of difference in credit ratings and loan limit for
overlapping customers
To standardize Fund Transfer Scheme and complete System
upgrade
Extended emotional integration program such as Seorabul
Summit, Run Together, Jump Together etc.
To develop joint OJT program
10
New Bank Strategy – Six Strategic Initiatives
To become an Integrated Financial Service Provider SFG is working
on 6 main NEW BANK strategic initiatives
Leading Financial Group in East Asia:
Best Integrated Financial Service Provider in Korea
1
One-portal group channel network
2
Total financial service and advisory by customer segment
3
“One Enterprise” organization and system
4
Shared infra and platform
5
Value-based portfolio management
6
Leading brand through shared value and contribution to society
The “New Bank”: Total service provider beyond banking
Bank
Securities
Credit Card
A
Trust
Insurance
New Biz
PB
B Retail
C SOHO
D SME
Large
E Corp.
/ IB
11
New Bank Strategy – Twenty Upgrade Projects
20 upgrade projects for NEW BANK
Upgrade Projects already in process before June 2005
Enhancement of
retail / PB Model and
Competence
Establishing SOHO
service model and
specialized operation
system
Enhancement in IB
and corporate service
model
Enhancement in
credit card strategy
Enhancement in
corporate credit
evaluation system
Enhancement in
integrated risk
management
(BASEL II)
Development and
establishing next
generation IT system
•
•
•
•
Business strategy differentiation based on customer
classification
Establishing optimal integrated Network on Group
basis
Business strategy differentiation based on customer
classification
Establishing specialized operation unit
•
•
Defining Large Corp and SME competencies and roles
Establishing optimal integrated Network on Group
basis
•
Defining business strategy based on comparative
advantage
Planning integration and operational structure of credit
card
•
•
•
•
•
•
Establishing advanced credit analysis and evaluation
system
Upgrading related IT system
Risk management system structure in preparation for
BASEL II
Cost saving with co-development and IT integrationCost saving W73 billion
Master planning group IT strategy and upgrade
execution plan
Upgrade projects scheduled after June 2005
Developing Group PB
Implementation Plan
Developing Group IB
expansion
Development of New
Business Sector
Establishing channel
strategy
implementation plan
Implementing Group
level BPR for
enhancement in
efficiency
Structuring
competitiveness for
strategic pricing and
product development
Completing Group
CRM operation plan
and execution system
Upgrading consumer
risk management
structure
Restructuring
executive HR and
related policy
New Bank
improvement strategy
Designing New Bank
organization structure
12
Integration process – Road Map
Integration
Committee
CHB Acquisition
by SFG
2003
2004
2005
Dual Bank (SHB+CHB) Period
1
Legal
Integration
IT
Integration
2006
Legal Merger process
“ONE BANK” INITIATIVES
• Initiatives in 5 main areas
• For examples,
- retail distribution channel sharing
- joint proposal for large-scale loans
- joint IR & advertisement, etc
※ Emotional integration events for all staffs
2
“NEW BANK” INITIATIVES
• 20 upgrade projects
• For examples,
- retail service model upgrade
- one portal channel network establishment
- business process reengineering, etc.
13
Successful Integration ?
Business Performance (June 2007)
Stock Price Performance
(Amount : KRW trillion)
SFG
KB
SHB
Woori
Hana
Banking Sector Average
KOSPI
Total
Asset
220
198
195
133
Net
Income
1.4
1.5
1.3
0.6
ROA
(%)
1.42
1.86
1.60
1.08
ROE
(%)
19.55
29.96
23.11
16.23
2003-08
2007-03
SFG outperformed market average !
14
Continuing…..
Banking
2007
Retail, Corporate, Private
 March 23 : LG Card joined
 ~
Now : Dual Card Co.
Credit Card
 October 1 : Integration
Brokerage
Investment
Insurance
• 12 Subsidiaries in Total
• Total Asset (as of March 2007)
→ KRW 259 trillion
(USD 282 billion)
Asset
Management
Other Services
15