China’s conglomerate and investment firm Fosun Group is considering buying a stake in the Chinese operations of a major Korean bank, industry sources close to the matter told The Investor.
“Fosun made the offer earlier this year, and the bank is reviewing the proposal,” said one Beijing-based source who wished to remain anonymous. He said he could not give details of the bank, saying only that it was one of the top three commercial banks in Korea -- Kookmin, Woori and Shinhan.
Related: [EXCLUSIVE] CEFC chairman visits Korea to discuss deal with Hana
|Fosun Group Chairman Guo Guangchang|
Fosun is not new to Korea. In 2014, it bid to buy Hyundai Securities and KDB Life, and in 2016 it eyed ING Life Insurance, but failed. It was founded as a market research firm in 1992 by current Chairman Guo Guangchang and four others.
Chinese firms have been increasingly seeking tie-ups or stakes in Korean financial companies. Just last week, The Investor reported that CEFC China was making headway in discussions with Hana Financial Group for collaboration in China -- either by forming a joint venture or buying new stocks of Hana.
One primary reason Chinese firms are turning to foreign banks is because it’s a relatively easy way to attain a banking license. Foreign financial institutions, on the other hand, need a leg-up to make a mark in overseas markets where business is hard due to the lack of high-profile clientele and too much red tape. When these demands meet, a deal can be struck.
Another source said in addition to Fosun and CEFC, Wanda Group, the world’s largest property developer, has also shown interest in Korean banks -- which debuted in China in the 2000s when the local economy was growing at double digits. As of the end-2016, there were 10 Korean banks operating in China, according to Financial Supervisory Service.
Others say such tie-ups may not be easy to attain given the latest stormy relations between Seoul and Beijing over the former’s decision to deploy THAAD.
“One of the biggest challenges for these deals is that due to the ongoing spat over THAAD it is uncertain whether the banking authority will allow these kinds of deals to go through,” the source said.
“Another hurdle is the tightening regulations on companies that are too eager to buy overseas capital, like Fosun and CEFC.”
In mid-June, the China Banking Regulatory Commission ordered banks to check their exposure to four companies which have the most active portfolio of overseas M&As -- Dalian Wanda, Fosun International, HNA and Anbang Insurance Group.
By Park Ga-young (firstname.lastname@example.org