Nation’s No. 5 lender holds largest sales networksThe National Agricultural Cooperative Federation, or Nonghyup, will establish a financial group early next month, becoming the nation’s No. 5 lender in the financial industry.
The new financial group’s debut reflects the government’s policy to separately operate the credit or financial sector and the economy or farm products marketing sector.
The dividing of the business sector will mark the first time in 51 years since Agriculture Bank merged with Nonghyup in 1961.
The financial group, which will likely be dubbed NH Financial Group, will emerge as the nation’s fifth largest financial group.
By total assets, top four groups are Woori Financial, Hana Financial (which ranked second by recently acquiring Korea Exchange Bank), KB Financial and Shinhan Financial.
Woori saw its assets reach 394.8 trillion won ($346.3 billion) at the end of 2011, followed by Hana plus KEB with 366.5 trillion won, KB with 361.6 trillion won and Shinhan with 332.2 trillion won.
NH Financial is likely to see its assets come to about 250 trillion won this year.
Among the other (smaller) financial groups in the local market are Korea Investment Holdings, BS Financial and DGB Financial.
Though NH Financial will lag behind the top four players by assets, its sales networks are notable. It has the highest number of branches nationwide, surpassing the four groups.
NH Bank is operating 1,172 branches across the country. KB Kookmin Bank holds 1,165 branches, followed by Hana plus KEB with 1,007, Shinhan with 970 and Woori with 942.
In particular, NH Financial is expected to make the most of bank branches in provincial cities for its business expansion.
Around 70 percent of its bank branches located in provincial areas, while more than half of the other four groups’ bank branches are being operated in Seoul and satellite cities.
“I believe its wide sales networks could be a threat to competitors. Further, Nonghyup reportedly plans to hire more than 1,000 employees this year,” an official of the Financial Supervisory Service said.
The new financial group will control seven subsidiaries in the bank, securities, futures, asset management, life insurance, nonlife insurance and capital services sectors.
Its insurance unit will particularly be enhanced. NH Insurance will be divided into NH Life Insurance and NH Non-Life Insurance.
NH Life, with assets of more than 30 trillion won, is poised to compete with top three companies ― Samsung Life (150 trillion won in assets), Korea Life (65 trillion won) and Kyobo Life (60 trillion won).
The FSS official predicted that NH Financial will push for the bancassurance, or sales of insurance policies via the wide-spread bank branches.
But he stressed that the newcomer is required to raise the level of profitability, risk management and network systems security.
“Nonghyup suffered a large-scale attack by hackers last year. Gaining confidence via protection of customers should precede the business expansion,” he said.
The first chairman of NH Financial will be recommended at a committee later this week.
The coming chief is likely to replace chief executives of some of the group’s subsidiaries.
The government recently decided to invest 1 trillion won in NH Financial.
By Kim Yon-se (
kys@heraldcorp.com)
