Kookmin and Shinhan Compete to be Leading Bank

Kookmin Bank (KB) and Shinhan Financial Group will intensely compete with each other to become the leading bank of Korea’s banking industry, financial experts forecast. Shinhan, which ranks second in terms of assets following KB, is emerging as a powerful candidate with its well-organized system as a financial holding company.

Dong-A Ilbo held a survey of 22 banking experts at security firms, and private and public institutes on October 31 in line with the appointment of Kang Jeong-won as the new president and CEO of KB (October 29), and the launching of Citibank Korea (November 1).

The result showed that KB and Shinhan overwhelmingly won 10 votes each to become candidates for the title of leading bank in 2010, followed by Woori Financial Group and Hana Bank, which both won one vote, respectively.

The experts who voted for KB cited its firm grip on the banking industry with its largest asset base. They also pointed out that KB has competitive advantages in securing customers with its larger number of branches and brand awareness. Shinhan received high marks in risk management, product development capacity, and securing a professional workforce.

On the question of key factors inherent to being the leading bank, respondents gave two answers. Sixteen respondents, or 72.7 percent, said the scope of a bank’s assets was key, followed by agenda-setting function in the banking industry (seven respondents), asset soundness (six respondents), and efficiency (six respondents).

In a different survey of vice presidents of strategy at Kookmin, Shinhan, Woori, Hana and Citibank Korea, the vice presidents of Shinhan and Hana banks chose Citibank Korea as their most formidable rival which, they said, is equipped with a global network and product development capability. KB and Woori bank chose Shinhan, while Citibank Korea pointed out the four as its competitors.

“Regardless of size, the capacity to develop new financial services and products will decide the leading bank,” said Ji Dong-hyeon, a researcher at the Korea Institute of Finance.

Kang-Woon Lee Cheol-Yong Lee kwoon90@donga.com lcy@donga.com