April 20, 2024

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[THE INVESTOR] The chairman of CEFC China Energy, also known as Huaxin, visited Korea last week to discuss establishing business ties with Hana Financial Group, a source familiar with the issue told the Investor on July 3.

During a five-day trip, Ye Jianming, Chairman of CEFC -- a Fortune 500 firm with annual revenue of up to US$42 billion -- met with Hana Financial Group Chairman Kim Jung-tai and KEB Hana Bank Chairman Ham Young-joo on June 29 in Seoul.

 

Ye Jianming

The exact details of the tie-up are still unknown, but the two sides are expected to either form a joint venture or CEFC would buy new stocks Hana issues for a capital increase. 

KEB Hana Bank in Korea conceded that Ye held a meeting with Hana Financial Group executives, but said it had not produced any such development. 

"Ye was here on the invitation of Gyeonggi University. The meeting with us was only to explore our mutual prospects," said a KEB Hana spokesman.

The top brass of the two companies had met in Shanghai back in February this year, during which they reached an agreement to cooperate in China. Further progress was hindered, however, due to a rift between Seoul and Beijing over the former’s decision to deploy the U.S.-led Terminal High Altitude Area Defense System in South Korea.

Ye’s visit comes as Beijing authorities are stepping up scrutiny of Chinese companies that have been avidly snapping up overseas assets. In June, the China Banking Regulatory Commission ordered banks to assess their exposure to four companies with a growing portfolio of overseas M&As -- Dalian Wanda, Fosun International, HNA and Anbang Insurance Group.

Ye, who was ranked second in the Fortune 40 Under 40 list of the most influential young business people last year, is also an individual who is actively seeking out M&A opportunities. In late March, CEFC announced that it agreed to acquire a stake of about 20 percent in U.S. financial service firm Cowen Group, for $100 million. In 2016, it purchased a stake in a brewery company and an airline company in the Czech Republic. In Kazakhstan, it acquired a 51 percent stake in an oil company.

During the meeting, the two companies discussed how to cooperate in the financial and global investment sectors -- focusing on issues such as China’s One Belt and One Road initiatives.

Hana Bank China is currently the largest Korean bank in China, with assets and revenues reaching 7.98 trillion won (US$710 billion) and 28.7 billion won, respectively, as of end-2016. It is currently the 11th largest foreign bank in China in terms of assets and aims to become one of the top five by 2025.

Hana Bank China has been pushing ‘localization’ in a bid to diversify its business model that was focusing on Korean companies doing business in China. It has appointed Chinese executives in all 13 local branches except for the CEO of Hana Bank China. The bank also promised to replace the head of its Chinese headquarters with a Chinese national last year, but the plan is being delayed. Some sources say the reshuffling has been delayed largely due to the negotiations with CEFC.

“The cooperation between the two could create the desired effect for each company,” a Beijing-based analyst told The Investor on the condition of anonymity. “Hana wants to expand its business by localizing in China but it has not been easy to do so and CEFC wants to speed up its global development.”

By Park Ga-young (gypark@heraldcorp.com)