Hanwha Group puts savings bank on market, a clear succession path

Hanwha Group, South Korea’s chemicals-to-defense conglomerate, has put its non-core financial unit Hanwha Savings Bank up for sale, in a move seen to ensure a seamless handover of generational power to the group’s owner family members.

According to sources in the investment banking industry on Thursday, Hanwha is tapping potential buyers of a 100% stake in Hanwha Savings Bank owned by Hanwha Global Asset Corp.

Private equity firms are among the candidates to acquire the savings bank estimated at about 200 billion won ($156 million).

Hanwha Savings Bank joined Hanwha in 2008 and has grown to become the 27th-largest savings bank in Korea, with total assets of 1.6 trillion won as of end-2022. There are 79 savings bank brands in Korea.

It raked in 21.5 billion won of net profit last year on revenue of 90 billion won. Its operating profit reached 27.2 billion won.

The savings bank, however, is a non-core financial unit in Hanwha, and Korea’s seventh-largest family-controlled conglomerate is speculated to attempt to unload it to simplify its generational leadership succession.

SIMPLIFIED GENERATIONAL POWER SHIFT

Hanwha Group currently controls 96 units under four overarching business lines -- Aerospace, Ocean & Mechatronics; Green Energy and Materials; Finance; and Retail & Services.

The group is working on a process to hand over control of the group companies to the three sons of Hanwha Group Chairman Kim Seung-youn by splitting the businesses three ways.

The first son Kim Dong-kwan, the vice chairman of Hanwha Group, is also the chief executive officer of Hanwha Solutions Corp., Hanwha Aerospace Co. and Hanwha Corp. The heir apparent is expected to lead the group’s aerospace, petrochemical and photovoltaic businesses.

The group’s financial businesses are expected to be placed under the control of the second son, Kim Dong-won, and the retail and leisure companies are set to be led by third son Kim Dong-seon.

The middle son is currently the president of Hanwha Life Insurance Co., and the youngest son is the head of strategic management at Hanwha Galleria.

But Hanwha Savings Bank is under Hanwha Global Asset, a subsidiary of Hanwha Solutions led by the eldest son Dong-kwan.

The disposal of the savings bank is expected to solidify the second son’s grip over the group’s financial companies, according to industry observers.

Hanwha promoted Dong-won as president of the life insurer in an executive reshuffle in February this year, a move seen to accelerate Hanwha’s generational power shift in a three-way split.

Hanwha Savings Bank’s sale is also expected to pave the way for other such mergers and acquisitions among savings banks in Korea.

The Korean financial authority has been promoting M&As between savings banks to groom some into major banks to compete with the country’s major commercial banks.

Write to Jong-Kwan Park and Byeong-Hwa Ryu at pjk@hankyung.com


Sookyung Seo edited this article.