By Jhoo Dong-chan
Shinhan Financial Group is strengthening its non-banking sector in Vietnam, laying the groundwork to become a comprehensive financial group in the Southeast Asian country.
According to Shinhan Financial Group, Shinhan Card decided to give 216.4 billion won ($195.1 million) in credit to Prudential Vietnam Financial Company (PVFC), its capital subsidiary in the country.
In a bid to improve the group's non-banking business there, Shinhan Financial spent 161.4 billion won to acquire PVFC specializing in retail loans from Prudential Group in January.
PVFC was launched in 2006 by the U.K.-based group as the first foreign non-bank financial institution licensed for consumer financing in Vietnam. It was also the country's fourth-largest consumer finance company by outstanding loan balance.
Shinhan Financial plans to improve PVFC's financial soundness through the capital offering.
Using the money, Shinhan Card plans to shift high interest loans carrying double-digit rates PVFC borrowed from Prudential Vietnam Assurance Private Limited, another Prudential Group's subsidiary, into low interest loans with single-digit rates.
"Shinhan Financial Group Chairman Cho Yong-byung aims to strengthen not only the banking sector but also the non-banking sectors in Vietnam to amplify synergy between its subsidiaries there," said a Shinhan Financial official said.
"PVFC will be a valuable asset in Shinhan's business network _ it will greatly contribute to the group's earnings in the country."
PVFC has seen stable earnings growth for three years, posting 63.7 billion won in 2015, 77.2 billion won in 2016 and 82 billion won last year. Its market share has reached nearly 10 percent.
The move is also believed to be seeking to widen the gap in its fierce competition against other Korean card firms.
Lotte Card was approved by the Vietnamese government to acquire Techcom Finance, another local Vietnamese financial firm specializing in retail loans, in March.
Hana Card also concluded an MOU with the National Payment Corporation of Vietnam (NAPAS) and payment solution provider Alliex to expand its payment settlement services business in the month.
Although facing tough challenges from peer Korean financial firms, Shinhan is still said to be the most influential foreign financial firm in Vietnam.
The group's banking subsidiary Shinhan Bank established its local corporate body Shinhan Vietnam Bank in 2009, and in the retail finance sector acquired Australian-based banking firm ANZ Vietnam under Cho's leadership last April.
Shinhan Vietnam Bank is now the largest foreign bank there with assets worth a combined total of $3.3 billion. It also has about 900,000 customers.