Shinhan Financial Group

Overview: Shinhan Bank (SHB), the fourth largest Korean bank, purchased 80.4% shares of Chohung Bank, the oldest and fifth largest Korean bank, from Korean government in 2003. Many major banks in Korean banking industry, which is highly depended on and monitored by Korean Government, were bailout by the government during the Asian Financial Crisis. After the crisis, the banking industry faced a period of unprecedented mergers and restructuring. The new Kookmin Bank became the dominant bank in Korea, which had more than 30% market share. Shinhan Bank has many branches throughout the Seoul metropolitan area, large customer base, and an expanded portfolio of services. SHB created Korea’s first diversified financial holding company, Shinhan Financial Group (SFG) which aggressively expands its business portfolio through acquisitions, spin-offs and strategic partnerships. Key issues: In order to combine the two banks into one new bank after the dual bank period, SFG has developed some operational and emotional integration plan. To improve the integration process, the senior executives of SFG are reviewing and modifying the integration plan. One of the major concerns is the passive protest of employees and how to bring the union into the future vision. Analysis: CHB‘s employees lost confidence about the bank’s future development after the Asian Financial crisis but they are still proud for the long history of the bank and are loyal to it. As a result, CHB’s employees protested against the merger with SHB. CHB’s employees and union concern about the equity between CHB and SHB’s employees. CHB employees

worry about being inferior to the SHB’s employees and being unequally treated. On the other hand, SHB’s employees feel honored about the successful acquisition of the oldest Korean bank, CHB. However, SHB’s employees also worry about the future change of the bank. On the other hand, SHB and CHB have different cultures, which provide them competitive advantages. SHB has a...