Financial firms race to find M&As

Korea’s major financial holding firms have pushed to beef up their business portfolios via mergers and acquisitions (M&As) amid fierce competition to be the market leader, industry watchers said Monday.

Woori Financial Group, which revived its holding firm structure last week, pledged to proactively seek M&As to diversify its revenue sources beyond banking sectors and to be the top financial holding firm “in two to three years.”

Key fields of its focus include securities, asset management and real estate trusts, according to its officials.

“The takeover of a brokerage firm is necessary to set up the system as a comprehensive financial service provider,” an Woori official said, noting that the company is checking “a mid-sized one which has capacity, as well as customer numbers, in wealth management and investment bank sectors, among others.”

Among promising candidates are Samsung Securities Co. and Hi Investment & Securities, according to market watchers.

Such a takeover is expected to enable Woori to catch up with Hana Financial Group, though it may not be able to jump to the No. 1 slot.

As of end-September, Woori Financial owned assets worth 349.8 trillion won ($311.1 billion), while Hana had 381.9 trillion won. KB Financial Group Inc. was the No. 1 entity with its asset amounting to 477.7 trillion won, followed by Shinhan Financial Group with 457.7 trillion won, according to market data.

Competition between KB and Shinhan for the top spot has also gotten tougher.

Last week, Shinhan won state approval to acquire Orange Life, formerly known as ING Life Insurance, which is the country’s fifth-largest life insurer in terms of assets.

The move paved the way for Shinhan to be an industry leader with its combined assets to surge to 490 trillion won.

In an effort to consolidate its leading position, KB Financial also stressed “strategic M&As” to explore a sustainable growth engine.

The group is known to have considered the purchase of a life insurer, though no tangible moves have been detected.

“Korea’s financial holding firms have been heavily dependent on their banking sector. But it is not sustainable […] and financial groups are well aware of that,” Lee Si-yeon, an expert at the Korea Institute of Finance, said.

Yonhap