Why does Suhyup look to DGB as role model?
Fisheries association aims to grow into financial group next year
Suhyup, or the National Federation of Fisheries Cooperatives, which announced plans to establish a financial holding company next year comprised of a variety of financial subsidiaries, is aiming to follow in the footsteps of DGB Financial Group.
The reason why Suhyup chose DGB Financial Group as the role model of its blueprint to becoming a financial group is the structural similarity between the two financial companies. Just as Suhyup Bank is a financial core of the fisheries cooperatives, DGB Financial Group stemmed from Daegu Bank. Starting as a regional bank, DGB Financial increased its weight through aggressive acquisitions of non-banking financial subsidiaries.
At a ceremony Wednesday, Suhyup officially declared its vision to transform itself into a financial group next year. The fisheries cooperatives’ ambitious strategic plan follows the redemption of 1.2 trillion won ($903 million) in state loans that the lender received in 2001 to ride out the aftershock of the Asian financial crisis.
Celebrating the full redemption of the public loans earlier than its original deadline of 2028, Suhyup announced that it plans to acquire small-sized non-banking subsidiaries, notably an asset management or a capital firm, by the first half of next year.
Once it meets the minimum number of subsidiaries required to apply for the establishment of a financial holding company, Suhyup will push ahead with plans to transform itself into a financial group as of the third quarter of next year. It plans to complete the diversification of its businesses by 2030, as it continues to incorporate various non-banking affiliates, including brokerages.
Suhyup’s future moves are expected to overlap somewhat with the steps taken by DGB Financial. When DGB Financial Group was launched in 2011, it started with only three affiliates — Daegu Bank, DGB Credit and DGB U-Pay. It acquired non-banking subsidiaries almost every year since then.
The financial group began a series of acquisitions by purchasing a capital firm, followed by the acquisition of DGB Life Insurance in 2015, HI Investment & Securities in 2018, HI Investment Partners in April 2021 and the robo-advising platform, Newsystock, in August that year.
Now, DGB Financial owns 10 subsidiaries and four sub-affiliated companies, with its total assets exceeding 93 trillion won as of the third quarter this year. It is nearly triple that of the financial group’s total assets of 33 trillion won, when it was launched a decade ago.
Suhyup acknowledges that it is absolutely necessary to acquire non-banking subsidiaries to diversify and stabilize profits. According to data compiled by Suhyup, the local banking industry’s asset growth rate during the past decade stood at 6.7 percent, which is only about half of that of non-banking sectors. During the same period, brokerages posted 10.16 percent asset growth and asset management firms’ growth stood at 15.4 percent.
“Given the deteriorating profitability of non-banking financial companies recently amid high interest rates and high foreign exchange rates, the next few years seem like the proper time to acquire non-banking financial companies,” an official from Suhyup said.