NH hits globalization path

NH Nonghyup Financial Group Chairman Shin Dong-kyu

Chairman plans to open more overseas branches, beef up project financing

NH Nonghyup Financial Group Chairman Shin Dong-kyu said Thursday the group will start actively taking part in overseas project financing and opening branches overseas.

“Nonghyup initially didn’t even think of eyeing the global financial business after a previous loss of some 1 trillion won, but there are many project financing opportunities overseas,” Shin told reporters in Tokyo where he was attending the annual meetings of the International Monetary Fund and World Bank. “I said we should give it a go.”

He added that many business opportunities would be developed in order to diversify the group’s growth engines.

“We didn’t join project financing for the construction of desalination plants in Saudi Arabia and nuclear power plants in the United Arab Emirates, which were all attractive enough. So I said we should do it now.”

He said the bank will consult with the Export-Import Bank of Korea for cooperation in project financing around December.

“Nonghyup can actively co-finance projects organized by states and we will push forward with the plan from next year,” he said.

He also expressed confidence saying that Nonghyup’s credit rating is as high as that of the country, which allows it to raise funds at a low interest rate. “Co-project financing overseas can be a better opportunity than investment in the not-so-attractive local project financing.”

His confidence came based on Nonghyup’s recently successful issuance of dollar denominated bonds worth $500 million.

The five-year bonds carry an interest rate of 2.3 percent, or 165 basis points above the yield on five-year U.S. Treasuries. It originally offered a spread of 180 basis points, but with around 170 institutional investors subscribing to the debt offer, the spread was driven down.

“We were able to issue bonds with the best interest rate among local lenders, especially after global credit rating agencies recently elevated their sovereign ratings of Korea,” he said. “No one thinks we will go bankrupt.”

Shin said the group has been holding investor relations meetings and that he will meet with officials from investment banks during the IMF and World Bank meetings, which continue through the week.

Other officials said the group aims to increase its portion of overseas revenues to 10 percent within three years from the current 5 percent through overseas business.

An official from the group said the group will open its first overseas branch in New York this year, as a first step towards globalization.

“It’s true that there were some restrictions for us to go global in the past through our banking unit of the National Agricultural Cooperative Foundation (NACF),” a Nonghyup official said. “But since we have launched the financial group, a holding company controlling NACF’s financial services functions, we have more freedom to expand our business scopes.”

Apart from its globalization goals, Shin also said Nonghyup will target more young customers with various services.

“From later this month, we will launch products that can represent Nonghyup. We will launch a new image for our bank, credit cards, insurance and capital,” he said. “Nonghyup credit cards look ugly. We will change their design.” <The Korea Times/Kim Tae-jong>

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