Shinhan Bank has launched a financial holding system to manage its subsidiaries in Indonesia under a unified framework. This move not only addresses local regulatory requirements but also connects its banking, finance, and securities operations while establishing a foundation for integrated capital and risk management.
According to the financial sector on September 21, Shinhan Indonesia Bank officially transitioned to a financial holding company structure on September 16. Shinhan Bank received approval from the Indonesian Financial Services Authority (OJK) for its holding company conversion plan in September of last year and has since been restructuring its local subsidiaries and governance.
Instead of creating a new holding company, Shinhan opted to grant holding functions to the existing Shinhan Indonesia Bank. This structure allows Shinhan Indonesia Bank to continue its banking operations while also managing local financial subsidiaries in finance and securities as an 'operational holding company.'
The key aspect of this transition is the establishment of an integrated management system, moving away from the previous model of operating subsidiaries independently. This new approach enables the linking of customers and businesses across subsidiaries, expanding joint sales efforts and allowing for more systematic capital allocation and risk management at the group level.
Shinhan Indonesia Bank has also shown improvement in its performance. Its net profit increased from 7.6 billion won in 2023 to 22.1 billion won last year, nearly tripling over two years. Although the net profit for the first half of this year was 11.1 billion won, reflecting a 26.3% decrease from the same period last year, this was influenced by the previous year's reversal of provisions and gains from the sale of non-performing assets.
Shinhan Bank aims to focus on qualitative growth by strengthening its customer base and profitability in the markets it enters, rather than merely expanding its overseas network. The bank plans to support domestic companies' overseas ventures in collaboration with policy finance institutions while also expanding sales to strong local companies to promote localization of its customer base.
Additionally, the bank will enhance operational efficiency and product and service competitiveness at its overseas branches through artificial intelligence (AI) and digital initiatives. It also aims to improve the profitability and soundness of its overseas operations through qualitative asset growth and proactive risk management, considering capital efficiency.
A Shinhan Bank official stated, “This transition to a financial holding company is aimed at responding to local regulatory and governance requirements. Given that regulatory environments and business conditions vary by country, our immediate focus will be on stabilizing the financial holding system in Indonesia and enhancing our business competitiveness.”
* This article has been translated by AI.
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