April 25, 2024

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[THE INVESTOR] Following Lotte Group’s announcement that it plans to sell its credit card and insurance units to spur the completion of a holding company structure, many financial groups have emerged as potential buyers, according to industry sources on Dec. 6.

Despite previous market forecasts that Lotte Insurance might not be attractive as it relies heavily on the retirement pension of group employees and its risk-based capital ratio -- a gauge of financial soundness -- is at only 150 percent, the minimum requirement set by the Korean government, many firms are showing interest.
 

Lotte Insurance headquarters in Seoul Lotte Insurance

 
Hana Financial Group, Woori Financial Group and BNK Financial are likely to bid to reinforce their non-banking units, according to sources.

KEB Hana Financial does not own a non-life insurance unit and a company official has been quoted as saying that it has registered a trademark for Hana Insurance with the Korean Intellectual Property Office after “observing the market circumstances.”

Woori Financial, which is set to become a holding company early next year, is also considered a strong contender. Woori Bank, the nation’s only commercial bank that doesn’t have a holding company structure, seeks to bolster its competitiveness in the non-banking business which it lost in 2014. It has registered Woori Insurance in June, although no official was willing to comment on the matter.

Shinhan was initially interested in buying a non-life insurer but ended up acquiring Orange Life, formerly known as ING Life, two months ago.

For BNK Financial, a local financial group based in Busan and South Gyeongsang Province, both the credit card and insurance units of Lotte may be appealing, analysts said.

The group, which generates most of its revenue from Busan Bank and Kyongnam Bank, hopes to strengthen its non-banking business, while aiming to diversify its profit model by 2023.

Lotte Group and BNK share a local base. Moreover, the former is the second-largest shareholder with an 11.14 percent stake.

“Nothing has been finalized, although we are discussing the possibility at a working-level group,” a BNK official said.

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