A perspective drawing of the Hanwha Forena West Chungju Project, lead-managed by Shinhan Bank on July 10. (Photo: Hanwha E&C)

Shinhan Bank has been actively participating in various IB projects, including real estate project financing, while expanding the portion of the structured finance business to expand non-interest income.

Shinhan Bank participated in the Chungju Enterprise City Development Project as a project financing manager and made an equity investment in an apartment building project in the Godeok-Gangil area in Seoul.

Shinhan also provided funding for construction projects of logistics centers. The bank participated in projects to create a Coupang logistics center in Seo-gu, Incheon with global PEF KKR, and building a logistics center in Wongok-myeon, Anseong of Gyeonggi Province.

Shinhan Bank made these moves after determining the bank's traditional interest margin is limited.

In addition, the recent aftermath of private equity scandals led the bank to decide to diversify its business areas.

Shinhan Bank participated as the sole PF manager in the Chungju Enterprise City Apartment, which Hanwha Engineering & Construction will build, according to sources in the financial sector and the investment banking (IB) industry.

“Shinhan Bank alone arranged 30 billion won in PF financing for the housing project to be built in Chungju Enterprise City in Jungangtap-myeon, Chungju,” said an IB industry official said.

Shinhan Bank will set up a special purpose corporation (SPC) to raise funds by issuing asset backed short term bonds (ABSTBs) to a borrower.

In the real estate industry, the apartment complex will be supplied to Chungju Enterprise City for the first time in five years as a new apartment complex.

The sale of the apartments began in mid-June and a total of 5,700 apartments will be sold sequentially on six sites.

“Chungju Enterprise City is an unregulated area and has favorable development conditions such as attracting large companies and creating industrial complexes,” an industry source said.

Shinhan Bank is also active in projects for new logistics centers. Shinhan Bank, along with several financial companies, such as Mirae Asset Capital and Meritz Securities, also participated in the investment in the logistics center construction project in Wongok-myeon, Anseong of Gyeonggi Province.

Shinhan Bank established Anseong Logistics PFV for the construction of the logistics center and will raise funds for the project.

Shinhan Bank and its affiliates - Shinhan Financial Investment and Asia Trust - also participated in the project to create a Coupang logistics center in Seoknam-dong, Seo-gu, Incheon, along with the global private equity fund KKR.

Shinhan Bank is also promoting global projects. Shinhan Financial Group’s Global Investment Finance (GIB) Business Division completed an IB deal worth a total of $280 million last year to arrange finance related to the purchase of an Amazon logistics center in the U.S. Shinhan Bank arranged $188 million out of the total transaction amount as a senior loan and its affiliate Shinhan Financial Investment took over $93 million in total through mezzanine and equity methods.

 
The portion of the IB business between Shinhan Bank among other Shinhan Financial Group affiliates has been spiking.

Shinhan Financial Group’s GIB Business Division has already established itself as an important source of business revenues within the group.

Shinhan Financial Group logged its biggest-ever business performances since the launch of the GIB Business Division last year while enjoying a market share of 26.3 percent (total of 87 cases and 13,404.2 billion won).

The reason why banks that rely on conservative and traditional interest margin profits changed is that it has become virtually difficult to maximize profits through net interest margin (NIM).

Also, sales of financial instruments plummeted due to private equity scandals., The balance of banks’ private equity fund sales fell by 601 billion won to 17,142.6 billion won from the previous month as of the end of April, according to the Korea Financial Investment Association.

In the meantime, Shinhan Bank announced on July 9 that it has been selected as the No. 1 company in the banking sector for the 17th consecutive year in a Global Customer Satisfaction Competency Index (GCSI) survey organized by the Global Management Association.

The GCSI is a service quality measurement model established to help companies grow to world-class companies by providing global industrial competitiveness indicators and measures of global customer satisfaction management.

A total of 100,000 consumers took part in the survey, which involved 178 product groups in nine industries.