NongHyup Financial Group has become the nation's second-largest financial group by assets, surpassing Hana Financial Group and KB Financial Group, two longtime heavyweights in the industry.
The Financial Supervisory Service (FSS) said that Nonghyup's total assets hit 315.7 trillion won ($288.3 billion) in December, up 61.2 trillion won from a year ago, thanks to its acquisition of Woori Investment & Securities in June 2014.
Shinhan Financial Group is the largest financial firm by assets with 338 trillion won, followed by Nonghyup. Hana was third with 315.5 trillion won while KB ranked fourth with 308.4 trillion won.
"Assets of Nonghyup increased the most thanks to its purchase of the Woori Investment & Securities package," the regulator said. "Those of other financial groups hiked gradually."
The competition among the four financial groups for the leading bank status in terms of assets and profits is expected to become increasingly fierce this year.
The rise of NH Financial Group to the nation’s second-largest financial group has not only reshaped the local financial landscape, but also wowed critics who had been skeptical of whether it was capable of such a feat. In the recent process of acquiring Woori Investment & Securities, Woori Aviva Life Insurance and Woori Savings Bank, the group has beaten Woori Financial Group in terms of assets.
“NH Financial is now ready to compete with the industry’s top players,” said top officials of the NH Financial Group. Despite the rise to stardom, NH stresses that the company will always stand out from its peers due to its roots in the agricultural sector.
“We have a long-standing relationship with local farmers that has formed the bedrock of our current nationwide business network that still places the highest priority on ordinary Koreans,” said Cha Jong-in, an NH Financial spokesman.
NH Financial kicked off in 2012, but its roots go back to 1961 when its precursor, the National Agricultural Cooperative Federation — or NongHyup — was created to protect the rights of farmers and promote the agricultural industry.
Following NongHyup’s decision spin off its credit business, NH Financial was born in 2012 as a financial holding company handling banking, insurance, futures, securities and asset management.
Since then, NH Financial has been steadily expanding in size and scope but few expected that it could take over Woori’s brokerage houses.
Upon completing the 1 trillion won ($966 million) acquisition in June, NH not only became the country’s fourth-largest financial group, but it now controls Korea‘s largest brokerage unit. NH Financial’s assets are likely to grow to 290 trillion won in the near future, according to industry estimates earlier this year, to trail on the heels of KB Financial Group and Hana Financial Group, which hold assets of 296 trillion won and 295 trillion won, respectively.
Citing the growth potential, the group chairman said he expects NH Financial to grow into one of the nation’s most conspicuous financial groups by 2020.
To achieve this goal, Kim has pledged to increase the group’s total assets to 420 trillion won, and to raise the proportion of non-banking businesses to 4 percent of the company’s portfolio. Kim also claimed that NH would focus on devising long-term strategies and refrain from interfering in affiliates — citing recent power struggles that have erupted between some of the nation’s financial holding companies.
Despite its determination to reach the top, NH is not without challenges, with the biggest being NongHyup, which still holds unwavering control over the group thanks to its high stakes in the affiliates operated by the financial group.
Reflecting the difficulties involved in running NH Financial under such influence, the group’s former chairman Shin Dong-kyu told executives last year that he felt his authority was being eclipsed.
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