South Korea's Hana Financial Group announced yesterday it will buy almost 20 per cent of Bank of Jilin in northern China and become its single largest shareholder.
The deal marks the first Korean lender to invest in a mainland counterpart in an effort to establish a foothold in the country's growing banking industry and expand into North Korea.
'It's a blessing to both sides,' said Bonnie Lai, an analyst at China Construction Bank International. 'Hana could forge a better relationship with its Korean clients in China, while its investment could help boost the capital strength at Jilin Bank.'
Hana Financial Group, Korea's fourth-largest banking group, will purchase 1.2 billion new shares in Bank of Jilin for 329.6 billion won (HK$2.54 billion), or 1.80 yuan apiece. It will own 19.7 per cent after the deal, the Korean lender said in a statement.
With registered capital of 3.42 billion yuan (HK$3.91 billion), Bank of Jilin mainly offers deposit and loan services to local residents and enterprises in Jilin province.
The city lender was established in October last year from the merger of three local lenders. It had 215 branches on the mainland, mostly in Jilin, at the end of last year.
Hana said its investment in Bank of Jilin would act as 'a springboard for further expansion into North Korea when trade between the two Koreas becomes more active'. Jilin borders North Korea to the east.