S

outh Korean lenders Bank Hana and Korea Exchange Bank (KEB) Indonesia announced their merger on Monday in an effort to cater to thriving South Korean businesses in Indonesia.

Hana became the surviving entity after the merger and intends to change its official name to Bank KEB Hana.

The plan is pending approval from the Financial Services Authority (OJK).

Both banks are part of the Hana Financial Group, which is one of South Korea'€™s largest financial institutions.

Prior to the merger, Bank Hana was 75.1 percent owned by Hana Bank Korea, 19.9 percent by the International Finance Corporation (IFC) and 5 percent by Indonesian businessman Bambang Setijo.

Meanwhile, KEB Indonesia was 99 percent controlled by KEB Korea and 1 percent by multifinance firm Clemont Finance Indonesia.

According to new business details, Hana'€™s shareholder composition consists of KEB Korea with 49.8 percent, Hana Bank Korea with 37.3 percent, the IFC with 9.9 percent, Bambang with 2.5 percent and Clemont with the remaining
0.5 percent.

Its total assets currently stand at Rp 13.2 trillion (US$1.15 billion) and its capital amounts to Rp 2.75 trillion.

According to Bank Hana operations and retail director Bayu Wisnu Wardhana, the merger was carried out to comply with Bank Indonesia'€™s single presence policy, which requires banks with the same ownership to consolidate, and to serve the growing number of South Korean businesses and community.

'€œKorean investors and firms are our captive market,'€ he told reporters during a media briefing.

'€œLast year'€™s trade between Indonesia and South Korea was valued at $23 billion and it is estimated to surge to $50 billion by 2015. So we expect to benefit from that.'€

Bank Hana'€™s optimism is also supported by data from the Investment Coordinating Board (BKPM) and the Manpower and Transmigration Ministry.

BKPM data shows that South Korea was listed as the fourth-biggest investor in Indonesia with $2.2 billion in realized investments in 2013, after Japan, Singapore and the US.

The realized investments were up from $1.9 billion a year before.

Meanwhile, the Manpower ministry issued 9,075 permits for South Korean workers in 2013, rising from 8,190 permits issued in 2012 and 6,505 permits in 2011.

The figure makes South Korean workers the third-largest expatriate group in Indonesia after Chinese and Japanese workers.

Bank Hana chief financial officer Lee Hwa-soo added that the lender expected to benefit from the mushrooming South Korean firms by managing their payrolls as well.

In 2014, Bayu said that Bank Hana hoped to expand its outstanding loan portfolio by 27 percent to around Rp 12.8 trillion and its third-party funds by 25 percent to Rp 12 trillion.

'€œBy year-end, our profits are estimated to stand at Rp 250 billion from Rp 232 billion in 2013,'€ he said.