Local chaebol and financial groups are engaging in another round of heated competition in the saturated credit card market.
The excessive rivalry between the conglomerates and the banking groups over the money-spinning business stemmed from a credit card fiasco about 10 years ago.
The 2003 woes from the reckless doling-out of credit cards led to a record-high number of credit defaulters and the downfall of then-No. 1 issuer LG Card.
The latest competition looms large between the card units of Samsung, Hyundai Motor and Lotte groups versus the units of Shinhan, KB, Hana and Woori financial groups.
Small differences from the 2003 situation are that Shinhan Card acquired LG Card, and SK Telecom holds a 49 percent stake in Hana Financial’s card unit.
In the wake of the 2003 fiasco, the stand-alone card units of three financial groups ― Hana, KB and Woori ― were absorbed into their respective bank affiliates.
However, amid losses in market share, the three players have re-spun off their card operations from Hana Bank, KB Kookmin Bank and Woori Bank over the past three years.
For the chaebol-based contenders, Samsung Card is taking the initiative in aggressive marketing.
The Samsung Group’s card unit, which has grabbed about 14 percent of the market, is grappling to narrow the gap between the largest issuer, Shinhan Card, whose share hovers around 20 percent.
Samsung Card has continued to increase the number of cardholders under its exclusive contract with the U.S.-based discount chain Costco Wholesale Corp.
Close behind Samsung Card, Hyundai Card and KB Kookmin Card are also vying for second place with market shares of 13.1 percent and 12.7 percent, respectively.
Woori Card, which is scheduled to complete its spin-off process in early March, is poised to fuel the heated issuance competition as a stand-alone unit of the nation’s largest financial group.
Lotte Card and Hana SK Card are also struggling to attain their mid-term goal of capturing 10 percent and 5 percent of the market, respectively.
“Amid mid- and low-income households’ worsening financial status, their movement and approval of spin-offs by the Financial Services Commission are inviting tough criticism,” said a banking research analyst.
He noted that Korea saw household debt reach an all-time high of more than 950 trillion won ($880 billion), which could possibly be linked to mass production of credit delinquents.
Further, other financial firms such as NH Financial Group and KDB Financial Group are also seeking to launch their own stand-alone card units.
By Kim Yon-se (email@example.com