Expansion in United States Hana Financial views global expansion as one of its key growth drivers over the

next few years. Integral to this expansion is obtaining a strong foothold in the U.S. market. Strategically, there are a few distinct options to break into the foreign market: establish branches under the Hana Bank brand, develop a joint venture with an established player in the market, or acquire majority ownership in a current player. Each of the options entails risks and benefits. The U.S. commercial banking market is extremely competitive with a relatively low concentration of market share. There are only four large U.S. banks that have over 5% market share in the industry: Wells Fargo 12.8%, JPMorgan Chase 10%, Bank of America 6.1%, and Citigroup 5.3%. The remaining market is fragmented across regional banks, and small national banks. A few of the key success factors in this industry are brand recognition, economies of scale through M&A activities, and client access through strong branch and ATM networks. Hanas ability to compete with the currently established U.S. banks through branch and location acquisition seems unlikely to lead to a successful entry strategy into the market. While the company has had recent experience developing economies of scale through M&A in its takeover of KEB, the large capital requirements required to build a strong brand presence and develop an efficient branch network eliminates this as a viable option. The second option for Hana Financial is to develop a joint venture with an established U.S. bank. The primary difficulty in implementing this strategy is finding a partner willing to establish the relationship and assist Hanas entry into the competitive industry. It is highly unlikely that Hana will find such a partner, as a large majority of the benefit of the relationship would be realized by Hana alone. The most promising of strategy entry option for Hana Financial is the acquisition of a current player in the industry. The most logical move is to target banks that cater to Korean-Americans in cities and regions with large Korean populations such as Los Angeles and Northern California. The characteristics of Korean-American consumers in these regions is well suited for Hana to make an entry into this market. Korean-American banks specialize in providing commercial banking services to Koreans living in high density, primarily Korean language regions of cities. Market share is relatively consolidated in this niche market, with the largest, BBCN Bancorp which was a merger of Nara Bancorp and Center Financial Corp in December 2011, holding about 30% share of commercial loans. A few other players are Wilshire Bancorp, Hanmi, and Saehan Bancorp. Additionally, consumers are more loyal to their current bank and are more interested in maintaining their relationships rather than searching for the lowest cost option. High savings rates and low charge-offs are additional positive characteristics of the Korean-American banking customers. Hana Financial has already recognized the strategy that will lead to success through their 51% acquisition of Saehan Bancorp in February 2012. Hana begins their entry into the U.S. market well behind their competition, with $563 million in assets and 10 branches compared to BBCNs nearly $5 billion in assets and over 40 branches. However, the banks expertise in developing economies of scales through M&A and launch of strong brand, product, and promotion strategies, the company is likely to foster strong relationships in the Korean-American community.

It is recommended that Hana Financial Group acquire 100% of Saehan Bancorp and establish crosspromotional activities between the parent and subsidiary units such as credit cards, Korean exchange investment access, and insurance products.

Sources: http://www.businesswire.com/news/home/20111130006594/en/Nara-Bancorp-CenterFinancial-Complete-Merger-Equals

http://brileyco.com/news_media/entry/analyst_joe_gladue_comments_on_koreatown_ban ks_management

http://labusinessjournal.com/news/2012/feb/10/south-korean-bank-take-majoritystake-saehan-banco/

Analyst Perspective. BBCN Bancorp. Morningstar Equity Research. Thomson Research Website.

Jose, Eben. Commercial Banking in the US. IBISWorld Industry Report 52211. IBISWorld Website. Feb. 2012. http://msbapps05.marshall.usc.edu:2391/industryus/default.aspx?indid=1288