As domestic financial companies in South Korea have recently received approval to establish financial holding companies in Indonesia, Hanwha Life has also begun preparations for its own transition. The company has set up a preparatory entity in the region to build a financial group structure encompassing its insurance and banking subsidiaries.
According to the financial sector on August 19, Hanwha Life established 'PT HANWHA ADVISORY INDONESIA' in the first half of this year. This entity was created specifically to prepare for the establishment of a financial holding company in Indonesia.
In the second quarter, Hanwha Life submitted its plan for establishing a financial holding company to the Indonesian Financial Services Authority (OJK) and is currently undergoing review. Once OJK approval is granted, the company will begin the subsequent procedures for establishing the holding company and restructuring its local financial subsidiaries.
The transition to a holding company for Hanwha Life follows its acquisition of Nobu Bank, which has expanded its financial operations in the region. Having operated in the life insurance sector in Indonesia, Hanwha Life entered the banking industry through the acquisition of Nobu Bank last year. Consequently, in the first quarter of this year, local authorities notified the company to establish a financial holding company structure.
OJK requires financial conglomerates of a certain size to establish a financial holding company structure. This is intended to unify capital soundness, risk management, and internal controls under a single governance structure for financial groups that operate in different sectors, such as insurance and banking.
As a result, South Korean financial companies operating in Indonesia are also actively pursuing the transition to a holding company structure. Shinhan Bank received OJK approval in September last year and plans to launch its financial holding company in Indonesia next month. KB Kookmin Bank also received OJK approval on the 5th of this month, about 14 months after submitting its initial plan in June of last year.
The establishment of a financial holding company and the restructuring of subsidiaries must be completed within one year of approval. If Hanwha Life receives OJK approval within this year, it is expected to finalize the establishment of its financial holding company by next year.
Once the holding company structure is in place, Hanwha Life's financial operations in Indonesia are expected to be managed in a more integrated manner. This will allow for unified management of capital and risks across its local financial subsidiaries, as well as enhanced collaboration through joint marketing and linked financial products, leveraging its customer base. It will also lay the groundwork for further expansion of its financial operations in the region.
Hanwha Life has been expanding its business in Indonesia, positioning the country as a key hub for its overseas financial operations. With the improved performance of Nobu Bank, expectations for synergies among subsidiaries following the transition to a financial group have also increased. Nobu Bank's net profit surged from 12 billion won in 2023 to 41.7 billion won last year, more than tripling in two years.
Hanwha Life's Indonesian subsidiary also recorded a net profit of 530 million won in the first half of this year, marking a return to profitability. The company is working to improve profitability by expanding sales channels such as bancassurance and strengthening the sale of products targeted at high-net-worth individuals and universal products.
A financial sector official stated, "The transition to a financial holding company structure can serve as an opportunity to establish a unified management system for local financial subsidiaries, while enhancing business synergies among subsidiaries through joint marketing and product linkages."
* This article has been translated by AI.
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