Chohung Bank

Chohung Bank was a historic South Korean commercial bank whose institutional roots reached back to Hanseong Bank, established in Seoul on 19 February 1897. Hanseong Bank is often described as Korea’s first bank. Chohung Bank itself was created on 1 October 1943 through the merger of Hanseong Bank and Dong-il Bank, the latter tracing its history to Hanil Bank, founded in 1906 and renamed in 1931. The resulting institution operated through Korea’s colonial, post-liberation, state-led and liberalizing economic periods. During the division of Korea, banking institutions with prior Japanese ownership or influence were taken over by public authorities on both sides of the 38th parallel. The northern operations were incorporated into North Korea’s emerging central-bank and monobank structure, while Chohung’s South Korean operations continued as a commercial institution. After liberation, Chohung sought to become the central bank of the new South Korean state, but that role went to the Bank of Joseon, which had greater institutional experience. Chohung’s ownership changed several times. It was privatized during the government of Syngman Rhee, nationalized again after the 1961 military coup, and re-privatized in 1983 as part of a limited financial-liberalization program. Its Seoul headquarters at 14 Namdaemunro was destroyed by fire and replaced by a new building completed in December 1966. By the mid-1990s, Chohung ranked among South Korea’s five most prominent commercial banks, alongside Korea First Bank, Korea Commercial Bank, Hanil Bank and Seoul Bank. The 1997 Asian financial crisis severely weakened the bank. In December 1998, Chohung announced a combination with Kangwon Bank and Hyundai Merchant Bank, accompanied by public recapitalization. The restructuring left the South Korean government with approximately 90 percent of the merged institution’s equity; by the end of 2002, the government still held about 80 percent. The bank subsequently became part of the consolidation of South Korea’s financial sector. Shinhan Bank acquired a majority stake in Chohung in 2003 and full ownership in 2004. The transaction was encouraged by the South Korean government as a way to achieve economies of scale and strengthen the banking system. The integration process culminated in April 2006. Because of Chohung’s historical prestige, the legal structure preserved the Chohung entity temporarily while renaming it Shinhan Bank. Chohung therefore ceased to operate as an independent banking brand, while Shinhan Bank continued to present itself as having roots reaching back to the 1897 Hanseong Bank. Chohung Bank Co., Ltd., commonly known as Chohung Bank or CHB Bank, was a South Korean banking company headquartered in Seoul. Its institutional history combined two earlier financial institutions: Hanseong Bank, founded in 1897, and Dong-il Bank, whose predecessor Hanil Bank had been established in 1906. The two institutions were merged on 1 October 1943 during the period of Japanese rule in Korea, creating Chohung Bank. Through this lineage, Chohung claimed one of the longest histories among South Korean commercial banks. The bank operated through several major political and economic transitions. After the division of Korea, authorities took control of banking operations in both the northern and southern zones. The northern operations were incorporated into North Korea's centralized banking system, while the South Korean institution continued as a commercial bank. Chohung sought to become the central bank of the newly independent Republic of Korea, but that role went to the more experienced Bank of Joseon, the predecessor of the modern Bank of Korea. Ownership changed repeatedly during the early South Korean republic. The bank was privatized during the government of Syngman Rhee, nationalized again by the military government that came to power after the May 16 coup in 1961, and subsequently returned to private ownership in 1983 as part of a limited financial-liberalization program. Its Seoul headquarters at 14 Namdaemunro was destroyed by fire and was later replaced by a new building completed in December 1966. By the mid-1990s, Chohung was one of South Korea's five most prominent commercial banks, alongside Korea First Bank, Korea Commercial Bank, Hanil Bank, and Seoul Bank. Its business centered on conventional banking services, including deposit-taking, lending, corporate finance, and other commercial-bank activities. The Asian financial crisis that began in 1997 placed substantial pressure on the institution and on South Korea's banking system more generally. In December 1998, Chohung announced a combination with Kangwon Bank and Hyundai Merchant Bank, accompanied by public recapitalization. The transaction left the South Korean government with approximately 90 percent of the merged institution's equity capital. By the end of 2002, the government still held about 80 percent. These ownership and recapitalization measures formed part of the broader restructuring of South Korea's financial sector after the crisis. Shinhan Bank acquired a majority interest in Chohung in 2003, obtained full ownership in 2004, and completed the merger in April 2006. The transaction was encouraged by the South Korean government as a way to strengthen scale and competitiveness in the banking industry. Because of Chohung's historical prestige, the post-merger structure preserved the Chohung legal entity for a period while renaming it Shinhan Bank. Chohung Bank therefore ceased to operate as an independent bank, but its historical identity remains important to Shinhan Bank's account of its institutional heritage. Shinhan regards the Chohung lineage as connecting it to one of Korea's earliest modern banks. Chohung's ownership changed several times. It was privatized during the government of Syngman Rhee, nationalized again after the May 16, 1961 military coup, whose government expropriated major shareholders on the grounds that their wealth had been acquired improperly, and re-privatized in 1983 as part of a limited financial-liberalization program under President Chun Doo-hwan. Its Seoul headquarters at 14 Namdaemunro was destroyed by fire and replaced by a new building completed in December 1966. By the mid-1990s, Chohung ranked among South Korea's five most prominent commercial banks, alongside Korea First Bank, Korea Commercial Bank, Hanil Bank and Seoul Bank. Its business centered on conventional banking services, including deposit-taking, lending, corporate finance, trade and merchant banking, and other commercial-bank activities. Shinhan Bank acquired a majority stake in Chohung in 2003 and full ownership in 2004. The transaction was encouraged by the South Korean government to create economies of scale and strengthen the banking system. The integration was completed in April 2006. Because of Chohung's historical prestige, the legal structure temporarily preserved the Chohung entity while renaming it Shinhan Bank. Chohung therefore no longer operates as an independent bank brand, while Shinhan Bank continues to claim roots extending back to Hanseong Bank's 1897 foundation.

Chohung Bank’s history is rooted in the emergence of modern banking in Korea. Hanseong Bank was established in Seoul on 19 February 1897 and is frequently identified as Korea’s first bank. Its early business model benefited from offering borrowing rates that were substantially below those available elsewhere, even though the bank itself charged borrowers considerably more than its own funding cost. An often-repeated anecdote about the institution concerns a donkey pledged as collateral: because the animal remained in the bank’s custody while the loan was outstanding, staff were expected to feed and care for it. A second predecessor, Hanil Bank, was founded in 1906 by Korean landowners. Its name referred to a Korean-Japanese banking association, and the institution underwent several reorganizations during Japanese colonial rule. After absorbing Hoseo Bank, it adopted the name Dong-il Bank in January 1931. Financial difficulties later brought the bank under stronger Japanese control. Hanseong Bank and Dong-il Bank were ultimately merged on 1 October 1943, creating Chohung Bank. The end of Japanese rule and the division of Korea transformed the ownership and organization of the banking system. Institutions that had previously been controlled or influenced by Japanese interests were taken over by public authorities in both Koreas. In North Korea, the relevant operations were incorporated into the central bank within a monobank system. In South Korea, Chohung continued as a commercial bank. It advocated becoming the central bank of the newly independent state on nationalist grounds, but the Bank of Joseon was selected instead because of its greater experience. Chohung’s status shifted with South Korea’s political economy. The bank was privatized during the Syngman Rhee administration, then nationalized again in 1961 after the military government that followed the May 16 coup expropriated major shareholders on the grounds that their wealth had been acquired improperly. The bank’s headquarters at 14 Namdaemunro in Seoul was destroyed by fire and was eventually replaced by a new building completed in December 1966. In 1983, Chohung was privatized again under a limited financial-liberalization initiative associated with President Chun Doo-hwan. By the middle of the 1990s, Chohung was one of the five leading commercial banks in South Korea. Its peer group included Korea First Bank, Korea Commercial Bank, Hanil Bank and Seoul Bank. The 1997 Asian financial crisis then placed considerable pressure on the institution. In December 1998, Chohung announced a restructuring combination with Kangwon Bank, founded in 1970, and Hyundai Merchant Bank. The transaction was supported by public recapitalization and left the South Korean government owning about 90 percent of the merged bank’s equity. Government ownership remained about 80 percent at the end of 2002. The final phase of Chohung’s history was shaped by the consolidation of South Korea’s financial sector. Shinhan Bank acquired a majority stake in 2003 and full ownership in 2004. The government supported the combination as a means of creating economies of scale and improving the competitiveness of the banking system. The integration was completed in April 2006. Chohung’s historical reputation led to a structure that preserved its legal entity for a time while changing its name to Shinhan Bank. The Chohung brand consequently disappeared as an independent operating bank, although Shinhan Bank regards its institutional lineage as extending back to Hanseong Bank’s 1897 foundation. Chohung Bank's history began with the formation of Hanseong Bank on 19 February 1897. Hanseong was established during the Korean Empire and became successful by offering borrowing costs that were lower than those commonly available elsewhere in Korea, even while maintaining a positive lending spread. A frequently repeated anecdote about its early operations describes a donkey being pledged as collateral, requiring bank employees to care for the animal while the loan remained outstanding. The story illustrates the practical and still-developing nature of early modern banking in Korea. The division of Korea after the Second World War split the institutional fate of the bank. As with other banks previously linked to Japanese interests, Chohung's operations were taken over by public authorities on both sides of the 38th parallel. In the North, the operations were eventually incorporated into the country's central-bank-centered monobank system. In the South, Chohung continued as a commercial institution during the creation of the Republic of Korea. Chohung initially argued on nationalist grounds that it should become the new country's central bank. The government instead selected the more experienced Bank of Joseon, which later became the Bank of Korea. Chohung was privatized during the Syngman Rhee administration, but the military government that followed the May 16 coup in 1961 nationalized it again. The nationalization involved the expropriation of major shareholders on the stated grounds that their wealth had been acquired improperly. The institution was privatized once more in 1983 during a limited program of financial liberalization under President Chun Doo-hwan. The bank's physical headquarters also reflected its turbulent history. Its building at 14 Namdaemunro in Seoul was destroyed by fire and was ultimately replaced by a new headquarters building completed in December 1966. By the 1990s, Chohung had become one of South Korea's five leading commercial banks. The 1997 Asian financial crisis exposed weaknesses across the Korean financial system and left Chohung under severe financial pressure. In December 1998, the bank announced a merger with Kangwon Bank and Hyundai Merchant Bank. Public recapitalization accompanied the transaction, giving the South Korean government roughly 90 percent of the merged company's equity. The government still held about 80 percent by late 2002. The next phase was private-sector consolidation. Shinhan Bank acquired a majority stake in Chohung in 2003 and full ownership in 2004. In April 2006, Chohung was merged into Shinhan Bank. The transaction was supported by the South Korean government as part of a policy intended to create stronger financial institutions with greater economies of scale. The merger structure preserved Chohung's legal continuity for a time because of the considerable historical status attached to the name, but the operating bank became Shinhan Bank. Chohung therefore survives principally as an institutional predecessor and heritage element within Shinhan Financial Group rather than as an active standalone brand.

• 2006

  Chohung is absorbed into Shinhan Bank

  [1]Chohung Banken.wikipedia.org

  The integration culminated in April 2006, after which the Chohung legal entity was renamed Shinhan Bank.

• 2004

  Shinhan obtains full ownership

  [1]Chohung Banken.wikipedia.org

  Shinhan completed its acquisition of Chohung Bank.

• 2003

  Shinhan acquires a majority stake

  [1]Chohung Banken.wikipedia.org

  Shinhan Bank obtained majority ownership of Chohung Bank during South Korea's post-crisis banking consolidation.

• 1998

  Restructuring with Kangwon Bank and Hyundai Merchant Bank

  [1]Chohung Banken.wikipedia.org

  Chohung announced a combination with Kangwon Bank and Hyundai Merchant Bank, supported by public capital.

• 1997

  The Asian financial crisis affects Chohung

  [1]Chohung Banken.wikipedia.org

  The regional financial crisis placed the bank under severe financial pressure and led to subsequent recapitalization and restructuring.

• 1983

  Chohung is privatized again

  [1]Chohung Banken.wikipedia.org

  The bank returned to private ownership during a limited financial-liberalization initiative under President Chun Doo-hwan.

• 1966

  Replacement Seoul headquarters is completed

  [1]Chohung Banken.wikipedia.org

  A new headquarters building replaced the bank's Seoul premises after the earlier building at 14 Namdaemunro was destroyed by fire.

• 1961

  The bank is nationalized again

  [1]Chohung Banken.wikipedia.org

  The military government following the May 16 coup expropriated major shareholders and returned Chohung to state ownership.

• 1943

  Chohung Bank is created

  [1]Chohung Banken.wikipedia.org

  Hanseong Bank and Dong-il Bank merged on 1 October 1943 to create Chohung Bank.

• 1931

  Hanil Bank becomes Dong-il Bank

  [1]Chohung Banken.wikipedia.org

  After absorbing Hoseo Bank, Hanil Bank adopted the name Dong-il Bank in January 1931.

• 1906

  Hanil Bank is founded

  [1]Chohung Banken.wikipedia.org

  Hanil Bank was created by Korean landowners and later underwent restructuring before becoming Dong-il Bank.

• 1897

  Hanseong Bank is established

  [1]Chohung Banken.wikipedia.org

  Hanseong Bank was founded on 19 February 1897 and later became one of the principal historical predecessors of Chohung Bank.

A long-established South Korean universal commercial bank with historical roots in the country’s early modern banking system. A historic South Korean commercial bank whose brand emphasized institutional longevity, domestic banking heritage, and full-service banking. Before its absorption into Shinhan Bank, it was positioned among the country's leading general-purpose banks rather than as a narrowly specialized financial institution.

• Consumer banking

  Retail banking

  Chohung’s retail banking activities included conventional deposit-taking and consumer financial services. The available reference material identifies the institution as a commercial bank but does not provide a detailed catalogue of named consumer products or channels. Chohung operated as a full-service commercial bank offering ordinary consumer banking functions, including deposit-taking, savings products, personal credit, and payment-related services. The available historical material does not identify individual named retail products or product brands.

• Business banking

  Commercial and corporate banking

  The bank served business customers through commercial lending, corporate finance and related banking services. Its position among South Korea’s major commercial banks made business banking a central part of its operating scope. Corporate and institutional banking formed an important part of Chohung's role as one of South Korea's major general-purpose banks. Its business included lending and financial services for companies and institutions, although the reference material does not provide a detailed catalog of named corporate products.

• International banking

  Foreign-exchange and trade finance

  Foreign-exchange and business-related international banking formed part of the institution's traditional commercial-bank scope. Specific branded products, pricing and launch dates are not identified in the available reference.

• Lending

  Commercial lending

  The bank's historical business included conventional lending to individuals, businesses, and other borrowers. Lending was central to the institution's original banking model, but specific loan names, eligibility rules, and pricing are not documented in the supplied sources.

• 2006

  Complete integration into Shinhan BankM&A

  Background

  After Shinhan acquired full ownership, the two banking operations were consolidated. Shinhan had obtained full ownership of Chohung and the government supported consolidation to promote economies of scale in banking.

  Action taken

  The integration culminated in April 2006. The legal entity associated with Chohung was retained temporarily because of the bank’s historical significance but was renamed Shinhan Bank.

  Aftermath

  Chohung ceased to operate as an independent bank brand, while Shinhan Bank continued to emphasize an institutional lineage dating to Hanseong Bank’s 1897 foundation.

  Source

• 2003

  Accept Shinhan Bank’s majority acquisitionM&A

  Background

  The South Korean banking sector was being consolidated after the financial crisis, while the government sought stronger institutions with greater scale.

  Action taken

  Shinhan Bank acquired a majority stake in Chohung Bank.

  Aftermath

  Chohung moved into the Shinhan group and subsequently became fully owned by Shinhan in 2004. Chohung moved into the Shinhan organization and proceeded toward full ownership and eventual merger.

  Source

• 1998

  Combine with Kangwon Bank and Hyundai Merchant BankM&A

  Background

  The Asian financial crisis left Chohung under significant financial pressure and prompted a broader restructuring of South Korea’s banking sector.

  Action taken

  Chohung announced a combination with Kangwon Bank and Hyundai Merchant Bank, supported by a public recapitalization program.

  Aftermath

  The restructuring resulted in the South Korean government holding approximately 90 percent of the merged institution’s equity, with government ownership still around 80 percent at the end of 2002.

  Source

1. 1Chohung Banken.wikipedia.org