Financial Services. Entering the South Korean financial services market*

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1 Financial Services Entering the South Korean financial services market*

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3 Introduction The recent economic and political development of South Korea has been a remarkable success story. In 1987, the country emerged from four decades of authoritarian rule to hold multi-party elections and is now one of Asia s most stable democracies. The country has also bounced back from the financial crisis of 1997 to become one of the world s most developed and productive economies. Although economic protectionism is still a potential issue, there is a growing recognition within the country that greater openness to foreign investment is essential if South Korea is to compete with China and other rapidly emerging economic rivals. Investment interest from international financial services groups is increasing, reflecting the economic potential and strengthening balance sheets of South Korea s financial institutions (South Korea has no legal restrictions on foreign ownership of financial services companies). Major acquisitions by Citibank in 2004 and Standard Chartered in 2005 were followed in September 2007 by HSBC s announcement of plans to buy a majority stake in the Korea Exchange Bank (KEB). 1 If the takeover goes ahead, it would be the most valuable deal involving a foreign buyer in the South Korean financial sector. The relaxation of controls on cross-ownership of financial services businesses ( Capital Market Consolidation Act ), along with further privatisation of state-owned banking interests and planned flotation of a number of leading life insurers, will open up further opportunities for entry, acquisition and business development. As leading international financial services groups look to develop their footprint in Asia, a presence in South Korea, one of the continent s most valuable markets, would appear increasingly desirable, if not essential. This flyer, produced by PricewaterhouseCoopers, 2 looks at the openings for entry and development at a time when the South Korean financial services sector is reaching out for foreign investment and discusses how international groups can realise these opportunities. 1 See P4 footnotes 9, 10 and PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. Entering the South Korean financial services market PricewaterhouseCoopers 3

4 Overview South Korea has a highly developed and profitable financial services sector including the second largest insurance market 3 and third largest banking 4 market in Asia. The stability of the banking sector is underpinned by strong fundamentals and active regulation. At less than 1%, 5 South Korea s non-performing loan ratio is low by regional standards (Taiwan s is 2.5% 6 and Thailand s is 8%, 7 for example). The BIS capital ratios were an average of 12.87% in June South Korea is due to move to Basel II regulation in Foreign investors own some 70% of the banking sector. 8 Longer-term strategic investors have moved into the market in recent years, in many cases acquiring the stakes of an earlier wave of private equity buyers. Recent entrants include Citibank 9 and Standard Chartered. 10 This trend has continued with HSBC s announcement in September 2007 that it had agreed to buy a 51% stake in KEB. 11 The asset management sector is set for rapid growth as a result of forthcoming pension reform. Foreign investment in the sector is increasing rapidly through a combination of acquisition, joint venture and greenfield developments. More than a third of the country s 52 asset managers are now solely or jointly run by international groups. 12 Recent foreign entrants include UBS, 13 ING 14 and Goldman Sachs. 15 Insurance remains dominated by a small number of local players. However, foreign companies are beginning to make strong inroads, especially through Bancassurance strategies. Foreign entry into the market has included both acquisition of existing companies (e.g. Allianz Life s acquisition of Jeil Life 16 ) and greenfield start-ups (e.g. ING Life 17 ). Planned sales and flotation could open up new investment targets. The Capital Market Consolidation Act, which is due to come into force in 2009, seeks to break down the barriers between financial sectors. The Act will enhance opportunities for cross-selling, including the marketing of increasingly popular investment funds to the customer bases of retail banks. Although protectionism could be a potential hurdle for foreign acquirers, there are hopes that following the elections in December 2007, deals will have become less politically sensitive and may therefore be easier to complete. The Financial Supervisory Service has pledged to tackle foreign investors concerns about regulatory transparency and consistency. 18 Measures include more straightforward licensing procedures. 3 Swiss Re Sigma World Insurance Report Financial Supervisory Service media release, Financial Supervisory Service media release, Taiwan Financial Supervisory Commission s Banking Bureau, Bank of Thailand, Financial Times, Citigroup media release, Standard Chartered media release, HSBC media release, Korean Overseas Information Service of the Government Information Agency ( UBS media release, ING media release, Reuters, About Allianz in South Korea ( ING Life Korea media release, Address by Kim Yong-Duk, Governor of the Financial Supervisory Service to the European Union Chamber of Commerce in Korea, Entering the South Korean financial services market PricewaterhouseCoopers

5 Investment environment South Korea is the third largest economy in Asia and 12 th in the world (market exchange rate basis MER). 19 Alongside Hong Kong and Singapore, South Korea is one of the original Asian tigers to have moved from emerging to high income developed economy. 20 Key export manufacturing sectors include ship-building (world leader), car-making (Hyundai Motors is the sixth largest vehicle manufacturer in the world) and electronics (Samsung Electronics is the world s leading producer of memory chips). Gross domestic product (GDP) expanded by 5% in 2006 and growth is expected to exceed 4% per annum until the end of the decade (see Figure 1). Manufacturing for export is the main engine of economic expansion (exports have grown by 15% per annum since ). In contrast, growth in services and the domestic economy as a whole has been sluggish in recent years. Consumer demand has in particular been held back by high levels of credit card and other household debt built up in the earlier part of the decade. Figure 1 Key facts Population GDP GDP per capita 49 million $888 billion (2006 MER) $1,117 billion (2006 PPP) $18,220 (2006 MER) $22,928 (2006 PPP) GDP growth 5% (2006) 4.5% (2007 estimate) 4.7% (2008 estimate) 4.2% (2009 estimate) Inflation 3.2% (03/07) Unemployment 3.3% (12/06) Sources: National Statistical Office, Economist Intelligence Unit, CIA World Factbook. As South Korea seeks to respond to competition from lower cost producers in China, Vietnam and other emerging economies, the focus of manufacturing is shifting from mass production to higher quality and added value. However, as a major manufacturer with limited natural resources, the country is vulnerable to the upturn in oil and other commodity prices, along with any downturn in the US and other key export markets. As an export-led economy with strong trading ties to the US, South Korea s prospects could also be affected by the continuing weakness of the US Dollar. Looking ahead, South Korea s economic development will benefit from its excellent standards of education. It ranks third in the world for human capital (as measured by education and training attainment), only exceeded by the US and Canada. 19 However, the country s ageing population could impede growth. The number of people in the core working age group (15 59) is set to decline by more than 20% by 2050, one of the largest reductions in the developed world. 19 Financial services as driver of growth The government sees the development of financial services (currently accounting for 7.5% of GDP 21 ), as critical in stimulating domestic growth. Key objectives include further deregulation and attracting more foreign investment as part of plans to turn the country into a financial hub for East Asia. The Capital Market Consolidation Act, which is due to come into force in 2009, will mark an important step forward in deregulation by breaking down the barriers between sectors. The Act is comparable to the UK s Big Bang or the repeal of the Glass-Steagall Act in the US. A key aim is to enable larger securities companies to provide a broader and more sophisticated range of capital market products and feegenerating services. By eliminating rules on the separation of banking, insurance and asset management operations, the Act will also open the way for greater cross-selling and cross-ownership within the financial services sector. 22 This includes providing banks with a valuable opportunity to develop their capital market, insurance and asset management businesses through marketing to their traditional customer base. 19 The world in 2050 ( 20 The World Bank defines a high income economy as having a Gross National Income (GNI) per capita of $11,116 or more. South Korea s GNI per capita in 2006 was $17,690 (MER) source www. worldbank.org country classification. 21 Address by Kim Yong-Duk, Governor of the Financial Supervisory Service, to the European Union Chamber of Commerce in Korea, Korea Times, Entering the South Korean financial services market PricewaterhouseCoopers 5

6 Investment environment At the same time, the government and regulators recognise the importance of strengthening governance, disclosure and risk management in sustaining investment and growth. This includes the move to Basel II capital standards, which are on track to be introduced in 2008, and International Financial Reporting Standards, which will be mandatory from South Korea has no formal legal limitations on the ownership of financial institutions by foreign groups and in that sense is one of the most open markets in Asia. However, some sections of the population are wary of relinquishing control to international groups. Sensitivities have been further heightened by the high returns made by foreign private equity buyers in the recent sale of stakes in banks and other financial institutions, though these profits could equally be seen as a reasonable reward for the risks taken when these holdings were originally acquired in the aftermath of the financial crisis. These political pressures have led to what some see as an inconsistent or even protectionist regulatory approach to foreign investors. The issue has been highlighted by the high-profile investigations into US private equity firm Lone Star s takeover of KEB in Particular concerns centre on whether the continuing legal wrangling might hold up HSBC s planned acquisition of KEB from Lone Star. The Financial Supervisory Service (FSS) has indicated that it will not consider the HSBC/KEB takeover until a court ruling on the Lone Star/KEB deal. 23 Looking ahead, however, the outlook appears more favourable. In a speech to the American Chamber of Commerce in October 2007, Kim Yong-Duk, the new Governor of the FSS, pledged to address concerns over inadequate regulatory transparency, consistency and predictability as part of the regulator s commitment to creating a market environment friendly to foreign investors. 24 This includes making it easier for new entrants to get in and giving equal treatment to domestic and foreign investors. As a sign of the FSS commitment to engaging with foreign investors, it has recruited William Ryback, a former official in the Hong Kong and US central banks, as a senior advisor. 25 There are also hopes that the political sensitivity over foreign acquisitions may now begin to recede following the elections in December 2007 and that the HSBC and other future deals will prove easier to complete. It is notable that all the leading candidates, including the new President, Lee Myung-Bak stressed the importance of attracting more foreign investment. It should also be noted that despite concerns over perceived protectionism, foreign investment in the financial services sector has continued apace in 2007 (see Figure 2). New entrants include UBS Global Asset Management, which acquired a controlling stake in South Korea s third largest asset manager in May Looking ahead, further bank privatisation and the planned flotation of a number of leading life insurers are expected to attract considerable attention from overseas. Interest is coming both from large international groups and from within the Asia-Pacific region, including China. 23 Financial Times, and Address by Kim Yong-Duk, Governor of the Financial Supervisory Service, to the American Chamber of Commerce on Financial Times, UBS media releases, and Entering the South Korean financial services market PricewaterhouseCoopers

7 Figure 2 Most valuable M&A deals in 2007 Sector Acquirer Target Stake Value Status Banking HSBC Korea Exchange Bank Insurance HSBC Hana Life Insurance 51% $6.3 billion Pending (final approval may be subject to a court ruling) 27 49% $58.4 million Pending 28 Munich Re Daum Direct Undisclosed Undisclosed Reported talks 29 AXA Kyobo Auto 75% Undisclosed Agreed 30 Asset Management UBS Daehan ITMC 51% $162 million Agreed 31 ING Group Goldman Sachs Landmark Investment Management Macquarie IMM Asset Management 100% Agreed % Agreed 33 Sources: See footnotes. 27 HSBC media release, HSBC media release, Bloomberg, AXA media release, UBS media release, ING media release, Reuters, Entering the South Korean financial services market PricewaterhouseCoopers 7

8 Market environment A) Banking The 1997 financial crisis led to the closure, merger and nationalisation of a number of banks, along with tougher government rules on lending, transparency and capital adequacy. A significant proportion of the non-performing loans were absorbed by KAMCO, a special purpose vehicle set up by the government. The government s decisive intervention led to a swift stabilisation of the credit system. Having reached 12.9% in the aftermath of the crisis, the bad debt ratio of South Korean banks has fallen steadily in recent years, both through disposal and improvements in the financial condition of corporations and individual consumers. In June 2007, 0.78% of loans by value were in arrears, a low proportion by international and certainly by regional standards. 34 Today, the banking industry in South Korea is the third largest in Asia with assets of $1,485 billion (June 2007). 35 Return on assets in 2006 was 1.12%. 36 The BIS capital ratios were an average of 12.87% at the end of the second quarter. 37 Returns have been especially strong at the top end of the sector (see Figure 3 for a list of the country s leading banks). Market leader Kookmin Bank announced a 9% increase in profits to reach a record of US$2.6 billion in The Shinhan Financial Group, owner of the country s third largest bank, recorded profits of US$1.98 billion in 2006, a 17% rise. 38 However, as much of this growth has centred on retail mortgages and real estate lending, some leading banks could be vulnerable to a prolonged downturn in an already deteriorating property market. Mortgage lending in the sector as a whole increased by 30% in 2006 to $29 billion, 39 though growth has since tailed off markedly following government curbs on allowable debt to income ratios aimed at stabilising rapidly rising house prices. Although South Korea has relatively low rates of home ownership in comparison to other developed countries, a surge in speculative investment has led to something of a property bubble in some larger cities. Figure 3 Top ten commercial banks in South Korea Rank Name Total assets* Operating revenue** 1 Kookmin Bank 229,852 11,314 2 Woori Bank 196,866 9,845 3 Shinhan Bank 194,765 9,486 4 Hana Bank 135,341 5,144 5 Korea Exchange Bank 81,660 4,408 6 SC First Bank 62,484 5,073 7 Citibank Korea 56,444 3,903 8 Pusan Bank 27, Daegu Bank 24,955 1, Kyongnam Bank 20, (Unit: USD million) Total 1,029,690 51,753 *As of 30 June 2007 **For the six months ended 30 June 2007 Banks in green are majority-owned by a single international group (most others have a high proportion of foreign ownership, though over a diverse range of shareholders). Source: Financial Statistics Information System. Banks interest income went up by 5% to reach $32 billion in The most significant growth market was lending to SMEs, which rose by more than 400% in 2006 to reach $47 billion. 39 The consumer credit segment (including credit card and hire purchase borrowing) grew by nearly 40% in 2006 to $45 billion. 39 South Korean banks are not as heavily exposed to US sub-prime losses as those in Europe. However, the indirect impact of global credit market issues may affect demand in 2008, especially as the country already has significant levels of household debt. 34 Financial Supervisory Service media release, Financial Supervisory Service statistics update, Financial Supervisory Service media release, Financial Supervisory Service media release, Financial Times, Korean Economic and Financial Review (April 2007). 8 Entering the South Korean financial services market PricewaterhouseCoopers

9 Looking ahead, the Capital Market Consolidation Act could open up new opportunities for cross-selling to bank customers, including further development of Bancassurance and capital market business. However, retail margins are coming under increasing pressure in the wake of growing competition and ever keener pricing. Other opportunities include further development of corporate lending and services, a sizeable proportion of which is currently conducted abroad. Consolidation drivers The top three banks are pulling ahead in a sector where the development of competitive scale is seen as increasingly important. Key developments include Shinhan Bank s US$7.5 billion acquisition of the country s leading credit card provider, LG Card, in March 2007, which was the country s largest ever M&A deal. 40 Woori Bank and Hana Bank have in turn emerged as both potential buyers and prime takeover targets as they and other smaller institutions seek to remain credible as consolidation takes hold. The government owns a majority stake (currently 73%) of Woori through the Korean Deposit Insurance Corporation (KDIC) and has given the green light for a phased sale of its shares. It is notable that half of the initial public offering in Woori in June 2007 was placed overseas. 41 Other government holdings that may eventually come on to the market include the shares its various agencies own in the Industrial Bank of Korea. Foreign investment The recapitalisation that followed the financial crisis in 1997 included significant investment and acquisition by foreign private equity buyers. Although opportunities for private equity involvement remain, many of the original buyers have sold on their stakes to longer term strategic investors. In 2004, for example, Citibank bought KorAm Bank (now part of Citibank Korea), a sizeable proportion of whose shares were owned by a private equity consortium. 42 In 2005, Standard Chartered acquired a controlling stake in the Korea First Bank (now SC First Bank) from private equity firm Newbridge Capital. 43 In September 2007, HSBC announced that it had agreed to buy a 51% stake in KEB, the country s fifth largest bank, from US private equity firm Lone Star for $6.31 billion. The prospective acquisition would provide HSBC with a significant presence in Asia s third largest economy and reinforce our position as Asia s number one international bank, said Group Chairman Stephen Green. 44 Entry and development options 1. Acquisition As Citibank and Standard Chartered have shown, acquisition offers a quick way to establish a top ten market presence. Many local institutions are in turn keen to attract foreign expertise and capital. The HSBC bid for KEB equates to a multiple of 1.83 times KEB s stated book value in June The price compares favourably to comparable recent takeovers in similarly mature markets Standard Chartered paid 2.3 times net asset value when it bought Taiwan s Hsinchu International Bank, for example. 45 However, takeover prices in South Korea may begin to edge up as competition for scale and acquisition from local players increases. Foreign buyers may also face significant trade union issues if seeking to restructure the acquired business. 2. Organic growth Licensing arrangements for new entrants are being simplified. However, it can take some time to establish a significant market presence through greenfield development in South Korea and no foreign bank has so far broken into the top ten through this route. Barriers include curbs on the opening of new branches. 3. Joint venture A number of international groups have developed joint ventures with leading local banks, matching their expertise with local distribution and customer relationship strengths. Prominent examples include Macquarie Bank, which has entered into partnerships with Shinhan Bank (asset management and financial advisory), Kookmin (treasury derivatives) and Woori (equity derivatives). 46 Other joint ventures include ING, which has developed a Bancassurance partnership with Kookmin Bank through joint ownership of KB Life and ING Life Korea International Herald Tribune, Reuters, Citigroup media release, Standard Chartered media release, HSBC media release, Standard Chartered media release, update ING media release, Entering the South Korean financial services market PricewaterhouseCoopers 9

10 Market environment B) Asset management In April 2007, the value of assets under management in South Korea was US$258 billion. 48 This already fast-growing sector is set for rapid further expansion as a result of an ageing population, high levels of savings and forthcoming pension reform. Changes include a new compulsory corporate pension scheme, which is due to cover all companies by Under the scheme, the management of at least a proportion of each company fund would need to be outsourced. The scheme will open up new growth opportunities for financial service providers, said Chang-lok Kim, Deputy Governor of the FSS, writing in the Korea Times. 49 Highlighting the potential for expansion, Mr Kim noted that pension plan assets were less than 3% of GDP in South Korea, compared to some 15% in Japan and more than 50% in the US. 49 The Capital Market Consolidation Act could also help to generate new custom by allowing asset managers to widen the scope of investment. These opportunities are attracting a surge of interest from international groups. Foreign-controlled asset managers currently hold some 20% of the market. 50 As the market broadens and permissible investments become more sophisticated, foreign marketing, product and investment management expertise are likely to become more prized by both customers and potential joint venture partners. Recent investors include UBS, 51 which acquired Daehan ITMC in a joint venture with Hana Bank (see Figure 4). In light of Korea s strong underlying economic growth, continuing reform of the pensions market and the increasing sophistication of investors, we believe that the Korean asset management market offers very significant potential for growth, and will be an increasingly attractive destination for foreign investment, said John Fraser, CEO of UBS Asset Management. 51 ING is augmenting its recently established ING Investment Management Korea through its acquisition and integration of Landmark Investment Management. 52 Those currently opting for greenfield development include JP Morgan Chase, which gained regulatory approval to set up operations under the newly introduced licensing arrangements in Figure 4 Top five asset managers in South Korea by AUM (March 2007) Mirae Asset Management Samsung ITMC Daehan ITMC* Woori AMC Korea ITMC AUM *Now renamed UBS Hana Asset Management US$22.44 billion US$21.21billion US$20.45 billion US$17.33 billion US$17.04 billion Source: Asset Management Association of Korea Major Accounts of B/S C) Insurance South Korea is the second largest insurance market in Asia, with premium income of US$101 billion in Life insurance premiums per capita were US$1490 and non-life premiums were US$591 in At 11.1%, the percentage of premiums to GDP is comparable to France or Switzerland 54 (see Figure 5). Figure 5 Comparison of insurance premiums Total as % of GDP Life per capita South Korea 11.1% $1490 $591 Japan 10.5% $2829 $760 Non-life per capita France 11% $2933 $1153 Switzerland 11% $3112 $2450 Source: Re Sigma World Insurance Report Asset Management Association of Korea website, update Korea Times, Korea Times /AFX News UBS media release, ING media release, Reuters, Swiss Re Sigma World Insurance Report Entering the South Korean financial services market PricewaterhouseCoopers

11 Some local life insurers are under-capitalised by international standards. The move to risk-based capital regulation could encourage flotation as companies seek to bolster their capitalisation. A recent court ruling over who should benefit from the proceeds of sale or flotation (the owners won out over policyholders) has cleared the way for the initial public offering (IPO) or sale of the country s largest life insurers including Samsung Life, Korea Life and Kyobo Life (see Figure 6). Figure 6 Top five life insurers in South Korea Name Total assets Premium income Samsung Life 120,910 17,577 Korea Life 50,550 8,601 Kyobo Life 47,817 9,260 ING Life 11,657 3,287 Shinhan Life 7,206 2,303 Source: Financial Statistics Information System, as of 31 March The insurance sector is highly concentrated. The top three life insurers controlled more than 60% of the market and the leading five non-life insurers had a combined share of more than 75% at the end of Although foreign investment in the insurance sector is low in comparison to other developed markets (19% market share for life and 1.5% for non-life), 55 international groups are growing strongly in areas such as Bancassurance and variable life insurance. Leading foreign-owned insurers include ING Life Korea, whose rapid recent expansion is a notable example of organic growth. Established in 1984, ING Life s premiums have tripled since 2003 and the company passed the million customer mark in May International groups that have grown through acquisition include Allianz Life, which took over the long-established Jeil Life in In March 2007, AXA acquired a 75% stake in Kyobo Auto, the country s leading direct motor insurance provider. 58 In November 2007, HSBC announced plans to buy a 49% stake in Hana Life as part of a joint venture with the Hana Financial Group. 59 Hana Life benefits from access to the Hana Financial Group s seven million customers. Forthcoming sales and IPOs could open up fresh opportunities for market entry and development through acquisition. D) Securities Strengthening economic confidence and increased pension fund investment in equities helped the Korean Composite Stock Price Index (KOSPI) to rise above the 2000 mark for the first time in the summer of Despite a subsequent decline in line with global market trends, the KOSPI was still some 40% up on the beginning of the year in December and has risen by more than 70% since The surge in share values has generated a significant increase in business for securities firms. On the brokerage side, further growth in volumes is expected as investors switch from real estate to stocks amid tighter mortgage controls. Foreign investment through local securities firms could also increase as a result of a planned three-year suspension of capital gains tax on income from overseas funds. 55 The Capital Market Consolidation Act could transform the sector by allowing securities firms to set up asset management, investment consulting and futures and derivatives trading arms (previously income was predominantly derived from brokerage fees). The Act is intended to open the way for the development of fully-fledged investment banks. However, the more immediate result may be consolidation from within and acquisition from outside the sector. 55 Korean Economic and Financial Review (April 2007). 56 ING Life Korea media release, About Allianz in South Korea, ( AXA media release, HSBC media release, Financial Times, Financial Times, Korea Exchange website ( Entering the South Korean financial services market PricewaterhouseCoopers 11

12 Good prospects Could it be time for international financial services institutions to take a fresh look at South Korea? The economy is growing far faster than most comparably developed markets. Deregulation and increasing consumer sophistication are opening up fresh opportunities for market development in what is already a stable and highly profitable sector. Although regulatory attitudes have been inconsistent at times, this is one of the few markets in Asia to allow outright foreign control of financial services companies. A consensus around the need for even greater openness to foreign investment is building within government. In particular, there is a growing recognition that to sustain its strong global position in the face of increasing regional competition, South Korea needs a dynamic and wellcapitalised financial sector. This in turn demands more expertise and investment from abroad. Banking and asset management are leading the way in foreign investment. Insurance looks set to follow. There is no turning back on Korea s financial globalisation, said Kim Yong-Duk, Governor of the FSS, in a speech to the EU Chamber of Commerce in October Ultimately, as financial services groups seek to extend their footprint across Asia, it would be pertinent to ask whether an Asian expansion strategy can be credible if it ignores one of the region s genuine economic giants. 63 Address by Kim Yong-Duk, Governor of the Financial Supervisory Service, to the European Union Chamber of Commerce in Korea, Entering the South Korean financial services market PricewaterhouseCoopers

13 Contacts If you wish to discuss any of the issues raised in this paper in more detail, please speak with your usual contact at PricewaterhouseCoopers or contact one of the following: Nick Page, Partner (Editor) PricewaterhouseCoopers (UK) 1 Embankment Place, London WC2 6RH, UK 44 (0) nick.r.page@uk.pwc.com Hong-Kee Kim, Partner Samil PricewaterhouseCoopers (Korea) STX Namsan Tower 13th Floor, 631 Namdaemunno 5-ga, Jung-gu, Seoul , Korea hkkim@samil.com Iwan Griffiths, Partner (Author) PricewaterhouseCoopers (UK) on secondment to Samil PricewaterhouseCoopers (Korea) Kukje Center Building 20th Floor, 191 Hangang-no 2ga, Yongsan-gu, Seoul , Korea iwan.griffiths@samil.com Cheong-Ryong Lee, Partner Samil PricewaterhouseCoopers (Korea) STX Namsan Tower 12th Floor, 631 Namdaemunno 5-ga, Jung-gu, Seoul , Korea crlee@samil.com Edward Choi, Director Samil PricewaterhouseCoopers (Korea) STX Namsan Tower 13th Floor, 631 Namdaemunno 5-ga, Jung-gu, Seoul , Korea edward.choi@kr.pwc.com Frank Morisano, Director Samil PricewaterhouseCoopers (Korea) STX Namsan Tower 5th Floor, 631 Namdaemunno 5-ga, Jung-gu, Seoul , Korea frank.morisano@kr.pwc.com Nick Page is a partner in the PricewaterhouseCoopers (UK) Financial Services Transaction team, based in London. Hong-Kee Kim, Iwan Griffiths, Cheong-Ryong Lee, Edward Choi and Frank Morisano are members of the Samil PricewaterhouseCoopers (Korea) Financial Services Transaction team, based in Seoul. Samil PricewaterhouseCoopers (Korea) has a team of 50 professionals dedicated to financial services M&A, the largest practice in the country, supported by other advisory lines of business including tax, risk management and performance improvement. The team has the experienced local knowledge to help you maximise value from your deal, whether you are acquiring or selling a business. Services include due diligence (financial, tax, operational, IT, human resource and legal), corporate finance, valuation and non-performing loans sale, as well as advising on post-merger transition. Subjects covered in the Financial Services M&A flyer series Investment prospects in the Indonesian banking sector Entering the Indian financial services market Banking in 2050: How big will emerging markets get? Entering the Gulf financial services market Entering the financial services market in Taiwan Entering the Chinese investment management industry Recent financial services M&A related publications Financial Services M&A: Going for growth in Asia (2007) Financial Services M&A: Going for growth in Europe (2007) Going for growth: The outlook for mergers and acquisitions in the financial services sector in Asia (2006) Financial services M&A: Review and outlook for mergers and acquisitions in the European financial services market (2006) Entering the South Korean financial services market PricewaterhouseCoopers 13

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