Shinhan Financial Group to Exercise Call Option on April-Maturing Hybrid Capital Securities

"Global Banking System Instability Spreads After CS Incident... Proactive Measures Taken"

Shinhan Financial Group announced on the 27th that it plans to exercise the call option (early redemption) on KRW 135 billion of new hybrid capital securities maturing in April.

This early announcement of the call option exercise by Shinhan Financial is a preemptive measure in response to growing concerns about the global banking system, following Credit Suisse (CS)'s write-off of new hybrid capital securities and the sharp rise in Deutsche Bank's CDS premium (the fee for credit derivatives that compensate other investors for losses due to default or bankruptcy).

A Shinhan Financial official stated, “We proactively issued KRW 400 billion worth of new hybrid capital securities in January, so we have the capacity for early redemption without additional fundraising. Shinhan Financial has consistently exercised all call options through stable capital ratios and proactive liquidity management, and will continue to do so consistently in the future.”

Meanwhile, according to Korea Credit Rating, the write-off of new hybrid capital securities in Korea is possible only when the issuing company is designated as a distressed financial institution. Korea Credit Rating also evaluated that since management improvement recommendations or requirements are implemented step-by-step before the designation of a distressed financial institution domestically, the probability of a sudden occurrence of write-off reasons is low.