Despite worries, they seek to connect affiliates for high-end synergy


Major financial groups have been in competition to introduce a fresh business concept which connects units, such as banks and brokerages.

Hana Financial Group introduced the “matrix” system in the local market in 2008.

Shinhan Financial launched a similar unit by selecting a group of employees from Shinhan Bank and Shinhan Investment Corp. last month.

Woori Financial has been in discussion with major affiliates to join the move later this year.

Though KB Financial has no plan to adopt the matrix system at the present time, it has decided to seek closer coordination between bank and securities units if necessary.

The initial move by Hana Financial has faced criticism amid speculation that the matrix is designed to strengthen its chairman’s influence over each unit.

In the wake of the introduction, main units including Hana Bank and Hana Daetoo Securities were pressured to play a significant role as funding sources for the group’s M&A projects, critics argue.

Financial regulators formally instructed Hana Financial to revise the matrix system, citing lax internal control in each unit.

But despite criticism of the system, it is about to become a trend in the local financial industry.

As Shinhan Financial has joined the system, Woori Financial is expediting its project.

Woori has reportedly completed working-level reviews with a view to launching the business during the first half of the year.

The main units aimed at improved synergy will include Woori Bank, Woori Investment & Securities and Woori Aviva Insurance.

Its bank unit has reportedly opposed the system, citing worries over an enhanced big brother role of the finance holding firm.

“There are still various hurdles for the matrix,” a Woori banker said. “Consultation with financial authorities is also necessary (as Woori Financial is government owned).”

In case of Shinhan, while its bank and brokerage units operate separately, a group was formed to work for the independent entity combining the specialties of the two major units of the group.

The combined services are mainly focused on “wealth management” and “corporate investment banking.”

For retail customers, the new entity’s staff of the WM business division offer services such as investment and finance advice.

Corporate customers are able to enjoy preemptive risk management tools in consultation with the entity’s CIB business division for procurement and settlement services.

The two Shinhan units as well as their parent Shinhan Financial Group predict the WM and CIB businesses will offer high-end customer value and play a significant role in future growth potential.

Shinhan executives expect the “bank plus brokerage” business unit could be a role model for upgrading the nation’s financial industry.

KB Financial is taking a wait-and-see approach toward the three contenders’ moves.

By Kim Yon-se (kys@heraldcorp.com)