NH Financial evolves as high-profile group

The rise of NH Financial Group to the nation’s fourth-largest financial group has not only reshaped the local financial landscape, but also wowed critics who had been skeptical of whether it was capable of such a feat.

In the recent process of acquiring Woori Investment & Securities, Woori Aviva Life Insurance and Woori Savings Bank, the group has beaten Woori Financial Group in terms of assets.

“NH Financial is now ready to compete with the industry’s top players,” said Yim Jong-yong, the NH Financial Group chairman.

Despite the rise to stardom, NH stresses that the company will always stand out from its peers due to its roots in the agricultural sector.

“We have a long-standing relationship with local farmers that has formed the bedrock of our current nationwide business network that still places the highest priority on ordinary Koreans,” said Cha Jong-in, an NH Financial spokesman. 

Growing scope

NH Financial kicked off in 2012, but its roots go back to 1961 when its precursor, the National Agricultural Cooperative Federation ― or NongHyup ― was created to protect the rights of farmers and promote the agricultural industry.

Following NongHyup’s decision spin off its credit business, NH Financial was born in 2012 as a financial holding company handling banking, insurance, futures, securities and asset management.

Since then, NH Financial has been steadily expanding in size and scope but few expected that it could take over Woori’s brokerage houses.

Upon completing the 1 trillion won ($966 million) acquisition in June, NH not only became the country’s fourth-largest financial group, but it now controls Korea‘s largest brokerage unit. NH Financial’s assets are likely to grow to 290 trillion won in the near future, according to industry estimates earlier this year, to trail on the heels of KB Financial Group and Hana Financial Group, which hold assets of 296 trillion won and 295 trillion won, respectively.

Citing the growth potential, the group chairman said he expects NH Financial to grow into one of the nation’s most conspicuous financial groups by 2020.

To achieve this goal, Yim has pledged to increase the group’s total assets to 420 trillion won, and to raise the proportion of non-banking businesses to 4 percent of the company’s portfolio.

Yim also claimed that NH would focus on devising long-term strategies and refrain from interfering in affiliates ― citing recent power struggles that have erupted between some of the nation’s financial holding companies and their affiliates. 


Internal struggles

Despite its determination to reach the top, NH is not without challenges, with the biggest being NongHyup, which still holds unwavering control over the group thanks to its high stakes in the affiliates operated by the financial group.

Reflecting the difficulties involved in running NH Financial under such influence, the group’s former chairman Shin Dong-kyu told executives last year that he felt his authority was being eclipsed.

“My authorities as financial group chairman are limited, as the NongHyup chairman holds (greater) power,” he said.

He was alluding to the uphill battle that NH Financial faced in making critical business decisions.

Unlike NH Financial, which sought to pursue profit and expand its presence, NongHyup was by nature more focused on the interests of the local agriculture industry. This was partly due to the stakes that NongHyup held in the firm, and also because the NongHyup chief was chosen by election based on votes from local branch cooperatives.

Yim, however, decided to take the bull by the horns.

Last year, while seeking to acquire the Woori brokerage firms, he repeatedly met with the NongHyup board and persuaded them that the big deal was indispensable for NH’s survival.

“In areas where we lack competitiveness, we must seek out profitable M&As and continue to reinforce our business portfolio,” Yim said.

With NongHyup on its side, NH Financial is now seeking to make the next step to stabilize the company following its latest acquisitions and pursue bigger profits.

By Bae Hyun-jung (tellme@heraldcorp.com)