Shinhan-Kor Am Bank To Be Merged Soon

Shinhan Bank and Kor Am Bank have agreed on merger in principle, and negotiations are in progress.

Coalition between commercial banks is becoming popular, as shareholders of Hana Bank and Korea First Bank are also meeting together to promote merger again after it was thought to be dissipated. Such trend is analyzed as the second `Big Bang` in banking circles.

Vice-president Choi Young-Hwi of Shinhan Financial Group Co., Ltd. confirmed on the merger on the 11th saying, “We have chosen an U.S. investment bank, JP Morgan, as an advisory firm, and are negotiating for merger with Kor Am Bank’s large shareholder, Carlyle.”

Last December-standard total assets of Shinhan and Kor Am Banks are 62 trillion won and 35.3 trillion won, respectively. Therefore, total assets will reach 100 trillion after merging, springing up to be No.2 after Kookmin Bank.

Shinhan’s stockholders requested Kor Am Bank to discontinue with the plan of issuing 22 million shares (worth 200 million dollar) of Depositary Receipt (DR) until June for capital expansion. If the capital amounts increase, the work of evaluating Kor Am Bank’s actual value becomes difficult.

Carlyle has been evaluating that “among domestic banks, Shinhan Bank most suits the business structure of Kor Am Bank”, and is also known to have been proceeding the merger behind the scenes. However, Kor Am Bank’s president Hah Young-Gu denied, “It’s not true”, avoiding concrete comments.

Meanwhile after visiting president Kim Seung-Yoo of Hana Bank on the 10th, Korea First Bank’s large shareholder Newbridge also agreed on the principle that the merger is to be promoted.

“There is no change in the principle to promote coalition between banks in order to grow big,” explained Hana Bank.

In the securities market on the day, as expectations about the merger were strongly reflected, Shinhan’s stock price rose by 6.4 Per Cent and Kor Am’s by 4.7 Per Cent.

Kim nirvana1@donga.com · Doo-Young srkim@donga.com