Korea-Japan Thawing Mood... Japanese Operations and Cooperation Strengthened by Banking Sector

Employees, including Jin Ok-dong, Head of Corporate Banking (fourth from the right on the second row), are taking a commemorative photo at the SBJ Bank headquarters located in Tokyo, Japan. (Photo by Shinhan Bank)

Major domestic financial groups have decided to expand the business scope of their local subsidiaries in Japan and strengthen cooperation with large Japanese financial companies. Financial firms are also stepping up amid the recent thaw in Korea-Japan relations following the Korea-Japan summit.

According to domestic financial circles and the Nihon Keizai Shimbun (日本??新聞) on the 4th, KB, Shinhan, and Hana Financial Groups are recently enhancing their local operations and cooperation with local financial firms in Japan. Shinhan Financial, which owns a local bank subsidiary, is expanding its business areas, while KB and Hana Financial, which do not have local subsidiaries, are strengthening cooperation with large Japanese financial companies. Nihon Keizai evaluated that "Korea-Japan relations in the financial sector are building close ties ahead of diplomacy."

Shinhan Financial plans to fully enter the corporate finance market through its local subsidiary, SBJ Bank. This marks 14 years since SBJ Bank entered the Japanese retail financial market. SBJ Bank has so far focused on deposit and loan services (including mortgage loans) for individual customers. As of September last year, SBJ's deposit balance stood at 973.6 billion yen (approximately 9.6661 trillion KRW), comparable to small regional banks in Japan. Jin Ok-dong, Chairman of Shinhan Financial, said, "Japanese banks are strong in wholesale, while Korean banks excel in retail," adding, "In the future, we will also participate in wholesale, that is, corporate finance."

Shinhan Financial plans to focus on startups rather than directly competing with local Japanese banks. Specifically, it intends to establish a fund this month to invest in startups from both Korea and Japan. This is a concrete step following the launch of Shinhan Financial's venture nurturing platform, 'Shinhan Futures Lab Japan,' in Japan last November. The fund size is expected to be around 5 billion yen (approximately 49.6 billion KRW), with 70% of the investment allocated to Japanese startups. Regarding the fund formation, Shinhan Venture Investment in Korea and Mizuho Bank and Mizuho Innovation Frontier in Japan are considering investments, while the fund will be managed by the Japanese venture capital firm 'Global Brain.'

A Shinhan Financial official stated, "We plan to expand SBJ's scope from retail to corporate finance," adding, "Regarding the Shinhan Futures Lab Japan project, SBJ Bank will be responsible for supporting banking-related services for Japanese startups."

Having roots among the Korean diaspora in Japan, Shinhan Financial has deep partnerships with the Japanese financial sector. Chairman Jin, who leads Shinhan Financial, is regarded as a 'Japan expert' who spearheaded the launch of SBJ Bank. As a result, SBJ Bank is the only foreign bank conducting retail operations in Japan. The day before, it also signed a business agreement to strengthen strategic partnerships and expand digital financial businesses with Kiraboshi Financial Group in Tokyo, Japan.

KB and Hana Financial are strengthening cooperation with Mitsui Sumitomo Financial Group (SMFG), one of Japan's top three financial companies. Since their business partnership began in 2007, KB Financial has built a 16-year close relationship with SMFG and is recently enhancing this partnership. The two companies have collaborated on projects such as the renewal of New York JFK International Airport, a gateway airport in New York, and ESG-related businesses in Australia. KB Financial Chairman Yoon Jong-kyu said, "It is difficult to stay only domestic, so we need to strengthen global and Asian markets," adding, "SMFG is ahead of us in overseas experience and wholesale aspects. We hold a study group once a year in Seoul or Tokyo to discuss current issues."

Although KB Financial has not yet entered the Japanese retail market, it continues related contacts. Chairman Yoon said, "We have started exchanging opinions with Japanese insurance companies to strengthen domestic insurance services," adding, "Conversely, we are researching what we can do for customers of Japanese regional banks through digitalization."

Hana Financial is also strengthening cooperation with Mitsui Sumitomo Trust Group (Sumit Trust) in Japan. Since 2014, the two companies have been exchanging talent and collaborating on various businesses in global, digital, corporate finance (IB), asset management, and trust sectors, and they have decided to further enhance this cooperation. Through this business agreement, Hana Financial will expand mutual cooperation with Sumit Trust focusing on five areas: equity investment, asset management, retail, digital innovation, and global IB business expansion.

Hana Financial Chairman Ham Young-joo said, "The trust and cooperative relationship that the two groups have firmly built over 10 years has become a model case of Korea-Japan financial cooperation, and we hope that financial diplomacy between the two countries will be further activated," adding, "Furthermore, Hana Financial will play a pivotal role for the sustainable future of both Korea and Japan."

This content was produced with the assistance of AI translation services.