Shinhan expands into Indonesia

Shinhan Card, a major Korean financial services firm, is buying a majority stake in the financial arm of Indonesia’s second-largest conglomerate, the company announced on Thursday.

Shinhan Card CEO and President Wi Sung-ho said the company will buy a 50 percent-plus share of Swadharma Indotama Finance, a financial subsidiary of the Salim Group, to become the major shareholder of the Indonesian company.

According to Shinhan Card, the Swadharma Indotama Finance is a multi-financing company, running corporate loans. As the major shareholder, Shinhan Card will control the management of the company and also take the position of president.

“So far, stakes of the Swadharma have been shared by other subsidiaries of the group,” a senior Shinhan Card employee said by phone. “Now, Shinhan Card will be the only major shareholder.”

“A major reason the Salim Group sold the subsidiary to us was because the group has an automobile maker named Indomobil,” the employee said. “With Shinhan’s management of the company, the group ultimately wants to run car leasing deals.”

With nearly 30 years of experience in the loan business, Shinhan Card plans to utilize the networks of the group in Indonesia to expand business across the country.

Following approval by financial regulators in both countries, a joint venture will be launched in early November, the company said.

Shinhan Card will hold a board meeting today to approve the acquisition and hold a ceremony in Indonesia on Aug. 26 to mark the partnership between the two companies.

The plan has been in the process since 2014, the company said.

Statistically, many foreign financial institutions are already running businesses in Indonesia, particularly focusing on installation loans.

According to a report by KB Financial Group in 2013, more than 30 of 198 financial firms running installation loans are foreign.

About two-thirds of them were Japanese, because of the country’s partnership with many Japanese auto makers in Indonesia, the KB report showed.

By acquiring the Indonesian company, Shinhan is also planning to run a credit card business in Indonesia within this year, for the first time as a Korean company there, targeting local clients.

So far, Shinhan Card saw a credit card business abroad a bit risky, due to lack of data on credit ratings of local people.

In November 2014, Shinhan Card became the first Korean card company to open an overseas branch in Kazakhstan.

Shinhan Card is aiming to expand its overseas credit card business in other countries, particularly targeting the 16 countries where its sister company Shinhan Bank has opened its branches.

BY KIM HEE-JIN [kim.heejin@joongang.co.kr]