Hana Financial emerges as strong candidate to acquire Lotte Card

By Lim Chang-won Posted : April 22, 2019, 12:45 Updated : May 3, 2019, 13:58

[Courtesy of Hana Financial]

SEOUL -- Hana Financial Group, a major bank holding company, has emerged as a strong candidate to acquire a credit card company which has been put up for sale by Lotte, the fifth-largest conglomerate in South Korea, as part of efforts to realign its corporate structure and enhance governance.

The final bid for Lotte Card that opened last Friday drew Hana and two domestic private equity funds, MBK Partners and Hahn & Company. The Hanwha Group was absent, sparking speculation it was scraping up funds to bid for Asiana Airlines, the country's second-largest flag carrier which was placed on the market together with two low-cost carriers.

"There is a high possibility of Hana Financial taking over (Lotte Card) due to the absence of Hanwha Group," Choi Jong-uk, an analyst from Hana Financial Investment, said, adding that if the acquisition price is not high, it could drive up the share price of Hana Card.

Hana Financial has said it has a sufficient reserve fund for mergers and acquisitions. "The fund for mergers and acquisitions to expand the group's non-banking sector is currently worth around one trillion won ($879 million) without increasing capital," Hana Financial chief financial officer Lee Seung-yeol said at a conference call on April 19.

Data from the Financial Supervisory Service showed that Shihan Card controls 21.5 percent of South Korea's credit card market, followed by Samsung Card's 19.3 percent and Hyundai Card's 15.5 percent. Lotte Card accounts for 11.2 percent and Hana Card 8.2 percent. Lotte Card and Hana Card do not have many duplicate customers. Hana Card's main customers are office workers involved in financial transactions while Lotte Card has been favored by retail customers and women.

In October 2017, Lotte Group chairman Shin Dong-bin launched Lotte Corp. and secured firm group-wide control by holding a 13-percent stake in the holding company. The realignment of group structure would be completed after the holding company absorbed more affiliates, including Hotel Lotte.

To win approval from financial regulators, the holding company should sell its holdings in key financial units -- Lotte Capital, Lotte Card and Lotte Insurance. Lotte Insurance controls a large portion of South Korea's calling card market under the low-price online automobile insurance brand name How Much.

Realignment was delayed in February last year, a district court in Seoul sentenced Shin to two years and six months in prison on charges of bribing Choi Soon-sil, the crony of South Korea's ousted ex-president Park Geun-hye. The chairman was released in October last year when an appeals court suspended his sentence.

Lotte Corp. holds a 7.1 percent stake in Lotte Insurance and 25.64 percent in Lotte Capital, which is the fourth largest player in South Korea's capital market and provides private financing, leasing, corporate financing and loans, lease financing, family loans, discount bills and other financial services. The sale of Lotte Capital was put on hold.








 
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