Hanwha Life's acquisition of equity in Nobu Bank in Indonesia is expected to conclude this month. If the transaction is successful, it will be the first overseas banking venture for a domestic insurance company.
According to financial sources, the Indonesia Financial Services Authority (OJK) plans to decide on the approval of Hanwha Life's equity acquisition in Nobu Bank between mid and late this month. Nobu Bank held an extraordinary general meeting on 25th of last month (local time) and passed the equity sale agenda with 100% approval from participating shareholders. Thus, only the approval from local financial authorities remains.
Hanwha Life has signed a share purchase agreement (SPA) to acquire 40% of Nobu Bank's equity held by Lippo Group, the sixth largest conglomerate in Indonesia. Once the transaction is finalized, Hanwha Life will become the largest shareholder based on single shareholder standards and will secure management rights. Lippo Group's shareholding is expected to decrease to 35.83%.
Kim Dong-won, Chief Global Officer (CGO) of Hanwha Life, who is leading this acquisition, has formed a separate task force (TF) to drive the acquisition efforts. The strategy is to combine Hanwha Life's digital capabilities with Lippo Group's banking operational expertise to establish a mobile-centric sales system based on hybrid channels.
Nobu Bank, established in 1990, is a midsize bank with total assets amounting to 2.3 trillion won as of the end of last year. It has 115 branches across Indonesia and employs 1,247 staff members, primarily focusing on personal mortgage loans and working capital loans for small and medium enterprises. The brand awareness in the local market is relatively high.
However, this acquisition comes with several variables. First, the Indonesian financial authorities have maintained a relatively conservative stance towards foreign financial firms. In fact, the four major banks in Korea—KB Kookmin, Shinhan, Hana, and Woori—faced 61 sanctions from 2020 to July of last year during the operation of their local subsidiaries. Hanwha Life may not be free from unexpected regulatory risks from financial authorities.
Additionally, it is a concern that the Indonesian authorities still regard the merger between Nobu Bank and another midsize bank, MNC Bank, as a valid plan. Da'an Ediana RAY, Administrator of OJK, recently noted, "The merger plan between Nobu Bank and MNC Bank is still alive," and stated, "We will continue to monitor the merger discussions even after Hanwha Life's acquisition."
Discussions about the merger between the two banks began in 2023 and were expected to be completed by August of the same year, but they are currently delayed. OJK has also kept the option of a forced merger open if necessary. This means Hanwha Life may face another management issue shortly after the acquisition.
Hanwha Life received approval from the Korean Financial Services Commission for the ownership of Nobu Bank's subsidiary in December of last year. If it secures approval from the Indonesian authorities, the acquisition process is likely to be officially completed by the end of this month.
An official in the insurance industry said, "Becoming the largest shareholder does not guarantee effective management or revenue generation for the corporation. Considering the local financial authorities' attitudes and the merger issue between Nobu Bank and MNC Bank, Hanwha Life may inevitably carry uncertainties even after the acquisition."
In response, a Hanwha Life official explained, "Given that we have submitted an approval application to the local authorities, we cannot be certain, but internally, we are viewing the situation quite positively."