About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. operates as a financial institution in Korea. The company provides comprehensive financial services, principally consisting of commercial banking services (mainly consisting of retail banking, which primarily focuses on making loans to or receiving deposits from individual customers (including high net-worth individuals and families) and, to a lesser extent, not-for-profit institutions, such as hospitals, airports and schools; corporate banking, which primarily focuses on making loans to or receiving deposits from for-profit corporations, including small- and medium-sized enterprises, and providing investment banking services to corporate clients; international banking, which primarily focuses on management of overseas subsidiaries and branch operations and other international businesses; and other banking, which consists of treasury business (including internal asset and liability management and other non-deposit funding activities), securities investing and trading and derivatives trading, as well as administration of the overall banking operations); credit card services; securities brokerage services; life insurance services; specialized credit services; asset management services, including securities investment trust management, investment advisory, call transaction, domestic and foreign private equity fund business, alternative investments through formation of private equity funds on a private placement basis and other management services; and other services - savings banking services, loan collection and credit reporting, collective investment administrative services, financial system development services, real estate trust services, investment advisory services, venture capital services, and non-life insurance services. In addition to the business activities, the company, at the holding company level, have the following business departments and planning offices, the primary functions of which are to support cross-divisional management with respect to these specific functional areas: group & global investment banking business department, global market and securities planning office, global business planning office, wealth management planning office and retirement pension planning office. Although the company has a number of overseas branches and subsidiaries, substantially all of its assets are located, and substantially all of its revenues are generated, in Korea. Deposit-Taking Activities Principally through Shinhan Bank, the company offers many deposit products that target different customer segments with features tailored to each segment’s financial and other profiles. The company’s deposit products consist principally of the following: Demand Deposits: Demand deposits do not accrue interest or accrue interest at a lower rate than time or savings deposits and allow the customer to deposit and withdraw funds at any time. Time and Savings Deposits: Time deposits generally require the customer to maintain a deposit for a fixed term during which the deposit accrues interest at a fixed rate or a variable rate based on certain financial indexes, including the cost of funds index, or COFIX, published by the Korean Federation of Banks. If the deposit is withdrawn prior to the end of the fixed term, the customer is paid a lower interest rate than that originally offered. The term typically ranges from one month to five years. Savings deposits allow the customer to deposit and withdraw funds at any time and accrue interest at an adjustable interest rate, which is typically lower than the rate applicable to time or installment deposits. Other Deposits: Other deposits consist mainly of certificates of deposit. Certificates of deposit typically have maturities from 30 days to two years. Interest rates on certificates of deposit are determined based on the length of the deposit and prevailing market interest rates. Certificates of deposit are sold at a discount to their face value, reflecting the interest payable on the certificates of deposit. The company also offers deposits which provide the customer with preferential rights to housing subscriptions under the Housing Law and Rules on Housing Supply (the Housing Law), and eligibility for mortgage and home equity loans. As a result of an amendment to the Housing Law in June 2015, new subscriptions to housing subscription savings accounts, housing subscription time deposits accounts and housing subscription installment savings accounts became no longer available after September 1, 2015. Instead, general housing subscription savings accounts (which combine all of the functions of the aforementioned three accounts) presently remain available to all. The contribution period is from the subscription date to the date on which the account holder is selected as the purchaser of a house, and the required monthly contribution amount is from a minimum of W20,000 to a maximum of W500,000. The interests accrued on general housing subscription savings accounts are paid in lump sum upon termination of the account, and such interests shall be calculated at the interest rate determined and announced by the Ministry of Land, Infrastructure and Transport. Those who have a general housing subscription savings account and meet certain other criteria are granted a preferential subscription right for the purchase of a house. In the case of privately funded houses, the aggregate amount of contributions made to the account must be at least the applicable deposit threshold amount for the location and area of the relevant house (from W2 million up to W15 million). It is impossible to change the account holder name of a general housing subscription savings account except in the case of inheritance by the death of the original account holder. The company also offers court deposit services for litigants in Korean courts, which involve providing effectively an escrow service for litigants involved in certain types of legal or other proceedings. The Monetary Policy Committee of the Bank of Korea imposes a reserve requirement on Won currency deposits at commercial banks at rates ranging from 0% to 7%, based generally on maturity and the type of deposit instrument. The Depositor Protection Act provides for a deposit insurance system under which the Korea Deposit Insurance Corporation guarantees repayment of eligible bank deposits to depositors up to W50 million per depositor and W50 million per insured under the defined contribution retirement pension per bank. Retail Banking Services The company provides retail banking services primarily through Shinhan Bank, and, to a significantly lesser extent, through Jeju Bank, a regional commercial bank. The company’s retail loans, before allowance for credit losses on loans and deferred loan origination costs and fees and excluding credit card receivables. Retail banking services include mortgage and home equity lending and retail lending, as well as demand, savings and fixed deposit-taking, checking account services, electronic banking and automatic teller machines (ATM) services, bill paying services, payroll and check-cashing services, currency exchange and wire fund transfer. The company provides modern and efficient retail banking services is important to maintaining its public profile and as a source of fee-based income. Retail banking has been and will continue to remain one of the company’s core businesses. The company’s strategy in retail banking is to provide prompt and comprehensive services to retail customers through increased automation and improved customer service, as well as a streamlined branch network focused on sales. The retail segment places an emphasis on targeting high net-worth individuals. Retail Lending Activities The company offers various retail loan products, consisting principally of loans to individuals and households. The company’s retail loan products target different segments of the population with features tailored to each segment’s financial profile and other characteristics, including customer’s occupation, age, loan purpose, collateral requirements and the duration of the customer’s relationship with Shinhan Bank. The company’s retail loans consist principally of the following: Mortgage and home equity loans, which are mostly comprised of mortgage loans that are used to finance home purchases and are generally secured by the housing unit being purchased; and Other retail loans, which are loans made to customers for any purpose other than mortgage and home equity loans and the terms of which vary based primarily upon the characteristics of the borrower and which are either unsecured or secured, or guaranteed by deposits or by a third party. Other retail loans also include advance loans extended on an unsecured basis to retail borrowers the use of proceeds for which is restricted to financing of home purchases prior to the completion of the construction. As of December 31, 2022, the company’s mortgage and home equity loans and other retail loans accounted for 50.9% and 49.1% of its total retail loans, respectively. For secured loans, its policy is to lend up to 40% to 100% of the appraisal value of the collateral, after taking into account the value of any lien or other security interest that has priority over its security interest (other than petty claims). For mortgage and home equity loans, the company’s general policy is to lend up to 40% to 85% of the appraisal value of the collateral, but subject to the maximum loan-to-value ratio, debt-to-income ratio and debt service ratio requirements for mortgage loans implemented by the Government. The loan-to-value ratio of secured loans, including mortgage and home equity loans, is updated on a monthly basis using the most recent appraisal value of the collateral, and maximum loan-to-value ratios are further adjusted based on factors, such as the location of the secured property, nature and purpose of the loans and level of competition in the market. Under the Regulation on the Supervision of the Banking Business and the Detailed Regulation on the Supervision of the Banking Business, the company’s banking subsidiaries were subject to, when extending mortgage and home equity loans, the maximum loan-to-value ratio of 70% (irrespective of the location of the property, subject to certain exceptions) and the maximum debt-to-income ratio of 60% (only in respect of housing units located in the greater Seoul metropolitan area, subject to certain exceptions). On January 31, 2018, the existing debt-to-income requirement was replaced by the modified debt-to-income ratio requirement, which reflects both principal and interest payments on the applicable mortgage and home equity loan and existing mortgage and home equity loans; and interest payments on other loans. The previous debt-to-income requirement had only reflected both principal and interest payments on the applicable mortgage and home equity loan and interest payments on existing mortgage and home equity loans. The Financial Services Commission also introduced a debt service ratio and a modified debt-to-income ratio in order to modernize credit review methods and stabilize the management of household debt. The modified debt-to-income ratio, which has been implemented beginning January 31, 2018 reflects both principal and interest payments on the applicable mortgage and home equity loan and existing mortgage and home equity loans; and interest payments on other loans. The company’s banking subsidiaries extend mortgage and home equity loans in compliance with the applicable regulations and administrative instructions by the relevant supervising authorities. Historically, the company has focused on customers with high net-worth. The company’s retail banking services include providing private banking services to high net-worth customers who seek personal advice in complex financial matters. As of December 31, 2022, Shinhan Bank operated 25 private wealth management service centers nationwide, including 17 in Seoul, 3 in Gyeonggi province and 5 in cities located in other regions in Korea. As of December 31, 2022, Shinhan Bank had approximately 19,462 private banking customers, who typically are required to have W500 million or more in deposits with Shinhan Bank to qualify for its private banking services. Corporate Banking Services The company provides corporate banking services, primarily through Shinhan Bank, to small- and medium-sized enterprises, including enterprises known as SOHO (standing for small office, home office), which are small enterprises operated by individuals or households, and, to a lesser extent, to large corporations, including corporations that are affiliated with chaebols. The company also lends to government-controlled enterprises. Small- and Medium-sized Enterprises Banking Under the Basic Act on Small- and Medium-sized Enterprises (the SME Basic Act) and the related Presidential Decree, as amended and effective from November 15, 2022, in order to qualify as a small- and medium-sized enterprise, the enterprise’s total assets at the end of the immediately preceding fiscal year must be less than W500 billion; the enterprise must meet the standards prescribed by the Presidential Decree in relation to the average and total annual sales revenues applicable to the type of its main business; and the enterprise must meet the standards of management independence from ownership as prescribed by the Presidential Decree, including non-membership in a conglomerate as defined in the Monopoly Regulation and Fair Trade Act. An enterprise shall not qualify as a small- or medium-sized enterprise if it is incorporated into, or is deemed to be incorporated into a business group subject to disclosure under the Monopoly Regulation and Fair Trade Act. Non-profit enterprises that satisfy certain requirements prescribed in the SME Basic Act and its Presidential Decree may qualify as a small- and medium-sized enterprise. Furthermore, cooperatives and federations of cooperatives as prescribed by the Presidential Decree are deemed as small- and medium-sized enterprises, effective from April 15, 2014. As of December 31, 2022, the company made loans to 499,616 small- and medium-sized enterprises for an aggregate amount of W131,304 billion (before allowance for credit losses on loans and deferred loan origination costs and fees). To maintain or increase its market share of small- and medium-sized enterprises lending, Shinhan Bank: has accumulated a market-leading expertise and familiarity as to customers and products. Shinhan Bank has an in-depth understanding of the credit risks embedded in this market segment, allowing Shinhan Bank to develop loan and other products specifically tailored to the needs of this market segment; operates a relationship management system to provide customer services that are tailored to small- and medium-sized enterprises. Shinhan Bank has relationship management teams in 185 banking branches, of which 53 are corporate banking branches and 132 are hybrid banking branches designed to serve both retail customers and, to a limited extent, corporate customers. These relationship management teams market products, and review and approve smaller loans with less credit risks; and continues to focus on cross-selling loan products with other products. For example, when Shinhan Bank lends to small- and medium-sized enterprises, it also explores opportunities to cross-sell retail loans or deposit products to the employees of these enterprises or to provide financial advisory services. Large Corporate Banking Large corporate customers consist primarily of member companies of chaebols and financial institutions. The company’s large corporate loans amounted to W49,368 billion (before allowance for credit losses on loans and deferred loan origination costs and fees) as of December 31, 2022. Large corporate customers tend to have better credit profiles than small- and medium-sized enterprises, and accordingly, Shinhan Bank has expanded its focus on these customers as part of its risk management policy. Shinhan Bank aims to be a one-stop financial solution provider that also partners with its corporate clients in their corporate expansion and growth endeavors. To that end, Shinhan Bank provides a wide range of corporate banking services, including investment banking, real estate financing, overseas real estate project financing, large development project financing, infrastructure financing, structured financing, equity investments/venture investments, mergers and acquisitions consulting, securitization and derivatives services, including securities and derivative products and foreign exchange trading. Shinhan Bank, through its Hong Kong branch, also arranges financing for, and offers consulting services to, Korean companies expanding their business overseas, particularly in Asia. Digital Corporate Banking Shinhan Bank offers corporate customers a web-based total cash management service known as Shinhan Bizbank. Shinhan Bizbank supports substantially all types of banking transactions ranging from basic transaction history inquiries and fund transfers to opening letters of credit, trade finance, payment management, collection management, sales settlement service, acquisition settlement service, business-to-business settlement service, sweeping, pooling, ERP interface service, host-to-host banking solutions, SWIFT SCORE service and global cash and liquidity management service. In addition, Shinhan Bank provides customers with integrated and advanced access to its financial services through its Inside Bank program, which combines Internet banking, capital management services and enterprise resource planning to better serve corporate customers. The Inside Bank program also seeks to provide customized financial services to meet the comprehensive needs of target corporate customers ranging from conglomerates to small enterprises in various industries, with the goal of enhancing convenience to the company’s corporate customers in accessing its financial services as well as assisting them to strategically manage their funds. In line with Shinhan Bank’s efforts to facilitate non-face-to-face online transactions for corporate transactions, in 2018, Shinhan Bank upgraded its virtual account-based corporate fund management service, known as Shinhan Damoa Service, making it available on mobile channels. In addition, Shinhan Bank has made the fund transfers via phone number service (allowing customers to make fund transfers without the recipients’ account number), which was previously only available for personal banking customers, available for corporate banking customers as well. As part of Shinhan Bank’s effort to lower settlement fees for small business owners, in May 2019, Shinhan Bank launched ZeroPay Biz Shinhan, an account-based mobile payment service enabling vendors to easily receive payments from customers’ accounts by scanning the vendor’s QR code with a smartphone. In October 2020, Shinhan Bank upgraded the Shinhan S Corporate Bank platform to launch Shinhan SOL Biz, a non-face-to-face application for corporate clients, with the goal of improving the platform so that Shinhan Bank can offer non-face-to-face channels to corporate clients that are as convenient and user-friendly as Shinhan Bank’s online retail banking platforms. In August 2021, Shinhan Bank launched a non-face-to-face name verification for corporate banking customers via smartphone using Shinhan SOL Biz, enabling corporate customers to open new bank accounts without visiting a branch. Corporate Lending Activities The company’s principal loan products for corporate customers are working capital loans and facilities loans. Working capital loans, which include discounted notes and trade financing, are generally loans used for general working capital purposes. International Business Shinhan Bank also engages in treasury and investment activities in international capital markets, principally, including foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services and foreign banking operations through its overseas branches and subsidiaries. Shinhan Bank aims to become a leading bank in Asia and expand its international business by focusing on further bolstering its overseas network, localizing its overseas operations and diversifying its product offerings, particularly in terms of asset management, in order to meet the various financing needs of its current and potential customers overseas. Other Banking Services Other banking businesses carried on by Shinhan Bank include treasury business (including internal asset and liability management and other non-deposit funding activities), trading of, and investment in, debt securities and, to a lesser extent, equity securities for its own accounts, derivative trading activities, as well as managing back-office functions. Treasury Shinhan Bank’s treasury division provides funds to all of Shinhan Bank’s business operations and ensures the liquidity of its operation. To secure stable long-term funds, Shinhan Bank uses fixed and floating rate notes, debentures, structured financing and other advanced funding methods. As for overseas funding, Shinhan Bank closely monitors the feasibility of raising funds in currencies other than the U.S. Dollar, such as the Japanese Yen and the Euro. In addition, Shinhan Bank makes call loans and borrows call money in the short-term money market. Call loans are short-term lending among banks and financial institutions in either Korean Won or foreign currencies with a minimum transaction amount of W100 million and maturities of typically one day. Securities Investment and Trading Shinhan Bank invests in and trades securities for its own accounts in order to maintain adequate sources of liquidity and to generate interest income, dividend income and capital gains. Shinhan Bank’s trading and investment portfolios consist primarily of Korean treasury securities and debt securities issued by Government agencies, local governments or certain government-invested enterprises, debt securities issued by financial institutions and equity securities listed on the KRX KOSPI Market and KRX KOSDAQ Market of the Korea Exchange. Derivatives Trading Shinhan Bank provides to its customers, and to a limited extent, trades for its proprietary accounts, a broad range of derivatives products, which include interest rate swaps, options, and futures relating to interest rate risks; cross-currency swaps, largely for Korean Won against U.S. Dollars, Japanese Yen and Euros; equity and equity-linked options; foreign currency forwards, options and swaps; commodity forwards, swaps and options; credit derivatives; and KOSPI 200 indexed equity options. Trust Account Management Services Shinhan Bank’s trust account management services involve management of trust accounts, primarily in the form of money trusts. Trust account customers are typically individuals seeking higher rates of return than those offered by bank account deposits. Because deposit reserve requirements do not apply to deposits held in trust accounts as opposed to deposits held in bank accounts, and regulations governing trust accounts tend to be less strict, Shinhan Bank is generally able to offer higher rates of return on trust account products than on bank deposit products. Trust account products generally require higher minimum deposit amounts than those required by comparable bank account deposit products. Unlike bank deposit products, deposits in trust accounts are invested primarily in securities (consisting principally of debt securities and beneficiary certificate for real estate financing) and, to a lesser extent, in loans, as the relative shortage of funding sources require that trust accounts be invested in a higher percentage of liquid assets. Under the Banking Act, the Financial Investment Services and Capital Markets Act and the Trust Act, assets in trust accounts are required to be segregated from other assets of the trustee bank and are unavailable to satisfy the claims of the depositors or other creditors of such bank. Accordingly, trust accounts that are not guaranteed as to principal (or as to both principal and interest) are accounted for and reported separately from the bank accounts. Trust Products Shinhan Bank offers variable rate trust products through its retail branch network. Korean banks, including Shinhan Bank, are allowed to guarantee the principal of the following types of variable rate trust account products: existing individual pension trusts, new individual pension trusts, existing retirement pension trusts, new retirement pension trusts, pension trusts and employee retirement benefit trusts. Shinhan Bank also offers an insignificant amount of guaranteed fixed rate trust products, which provide to its holders a guaranteed return of the principal, as well as a guaranteed fixed rate of return. These products are carry-overs from past offerings, and Shinhan Bank no longer offers guaranteed fixed rate trust products. Credit Card Services Products and Services The company provides its credit card services principally through its redit card subsidiary, Shinhan Card, and to a limited extent, Jeju Bank. Shinhan Card offers a wide range of credit card and other services, principally consisting of the following: credit card services, which involve providing cardholders with credit up to a preset limit to purchase products and services. Repayment for credit card purchases may be made either on a lump-sum basis, namely, in full at the end of a monthly billing cycle or on a revolving basis subject to a minimum monthly payment. cash advances, which enable the cardholders to withdraw cash subject to a preset limit from an ATM or a bank branch. Repayments for cash advances may be made either on a lump-sum basis or, in the case of credit cards issued before December 30, 2014, on a revolving basis. installment purchases, which provide customers with an option to purchase products and services from select merchants on an installment basis for which repayments must be made in equal amounts over a fixed term generally ranging from two to 24 months, and for certain limited types of cards, up to 36 months. card loans, which enable cardholders to receive, up to a preset limit, a loan which is generally unsecured. Repayment of card loans is made generally by repaying principal and interest in equal amounts on an installment basis over a fixed term of two to 36 months, repaying the principal and interest amounts in full at maturity, or making interest-only payments during the initial grace period of either three months or six months and repaying the principal and interest amounts on a monthly installment basis over the remaining period of typically two to 36 months. Shinhan Card derives revenues from annual membership fees paid by credit cardholders, interest charged on credit card balances, fees and interest charged on cash advances and card loans, interest charged on late and deferred payments and merchant fees paid by retail and service establishments. Merchant fees and interest on cash advances constitute the largest source of revenue. In addition to credit card services, Shinhan Card offers check cards, which are similar to debit cards in the United States and many other countries, to retail and corporate customers. A check card can be used at any of the merchants that accept credit cards issued by Shinhan Card and the amount charged to a check card is directly debited from the cardholder’s designated bank account. Shinhan Card obtained approval from the Financial Services Commission to test nine business, such as peer-to-peer credit card remittance services whereby individuals can send money to others directly using credit cards; a credit scoring system that evaluates individual business owners’ credit standing based on their revenue records and history of credit card use; small-scale investment using credit cards; face recognition payments; house rent payments using credit cards; rental brokerage platforms; overseas remittance using credit cards; quick payment to small merchants using credit card reward points; and family cards for underage children. Credit Card Products Shinhan Card offers a wide range of credit card products tailored for credit cardholders’ lives and to satisfy their preferences and needs. Credit card products offered by Shinhan Card include: cards that provide additional benefits such as frequent flyer miles and reward program points that can be redeemed by the customer for complementary services, prices or cash; platinum cards and other preferred membership cards, which have higher credit limits and provide additional services in return for higher annual membership fees; cards with additional features to preferred customers, such as revolving credit cards, travel services and insurance; cards with fraud detection and security systems to prevent the misuse of credit cards and to encourage the use of credit cards over the Internet; corporate and affinity cards that are issued to employees or members of particular companies or organizations; and mobile phone cards allowing customers to conduct wireless credit card transactions through their mobile phones. Customers and Merchants In addition to internal growth through cross-selling, the company seeks to enhance its market position by selectively targeting new customers with high net-worth and solid credit quality through the use of a sophisticated and market-oriented risk management system. Shinhan Card screens its credit card applicants and sets individualized credit limits for such applicants according to internal guidelines based on a comprehensive credit scoring system. The company also seeks to provide a wide variety of differentiated products and services tailored to its customers’ individualized needs through precision analysis and customer segmentation based on the big data it has compiled on its approximately 22 million customers. The company has also formed a team dedicated to the fintech business by actively pursuing technology developments and strategic alliances with key partners, as well as additional teams focused on innovation and creating new sources of value for its clients through the development of big data and digital platforms and provision of big data-based consulting services. In 2019, utilizing an innovative platform based on big data analysis, Shinhan Card launched a Super Personalization Service, aimed at providing the company’s individual customers with tailored and personalized services that meet their individual needs. As Shinhan Card has obtained a license from the Financial Services Commission as a MyData service provider, Shinhan Card has been able to utilize additional external data to enhance its ability to further refine and tailor personalized services for its customers. In 2022, Shinhan Card further leveraged its existing big data capabilities by diversifying and accelerating revenue-generating businesses, such as MyData-based loan brokerage, big data sales, credit bureau for small businesses, and commercial real estate analysis. In 2023, Shinhan Card plans to expand its capabilities as a platform company based on investments in big data and digital technology will seek to increase profitability by expanding and connecting its multiple financial and non-financial platforms. Additionally, Shinhan Card plans to advance big data marketing and data as a service business, further personalizing its marketing and servicing methods based on data-driven services, such as open banking, digital document management and MyData. Shinhan Card seeks to optimize data processing to align its internal services, systems, processes, and channels and use such data by utilizing artificial intelligence, machine learning and robotic process automation throughout the financial services it provides in order to enhance customer experience. Installment Finance Shinhan Card provides installment finance services to customers to facilitate purchases of durable consumer goods, such as new and used cars, appliances, computers and other home electronics products. Shinhan Card pays the merchants when Shinhan Card’s customers purchase such goods, and the customers remit monthly installment payments to Shinhan Card over a number of months, generally up to 36 months (and, in the case of installment financings for automobile purchases, up to 72 months), as agreed with the customers. For installment finance products for new cars, Shinhan Card historically charged, in addition to interest, an initial financing fee of up to 9.9% of the purchase price, depending on the customer’s credit score, the installment period and installment amount. Initial financing fees charged in connection with installment finance products for new cars, however, were abolished effective March 2, 2013 pursuant to the Financial Consumer Report (Automobile Financings) issued by the Financial Supervisory Service on January 29, 2013. Shinhan Card has installment financing arrangements with over 42,000 merchants in Korea, including major car dealers, manufacturers and large retailers with nationwide networks, such as electronics goods stores. Shinhan Card promptly processes installment financing applications and, based on the extensive credit information it possesses or can access, it is able to offer flexible installment payment terms tailored to individual needs of the customers. Shinhan Card also devotes significant efforts to developing and maintaining its relationships with merchants, which are the most important source of referrals for installment finance customers. Shinhan Card makes prompt payments to merchants for goods purchased by the installment finance customers. Auto Lease Shinhan Card provides auto leasing financing to retail customers and corporations. Securities Brokerage Services Through Shinhan Securities, the company provides a wide range of financial investment services to its diversified customer base including corporations, institutional investors, governments and individuals. Financial investment services offered by Shinhan Securities range from securities brokerage services, investment advice and financial planning services, and investment banking services, such as underwriting and mergers and acquisitions advisory services. Subject to market conditions, Shinhan Securities also engages in equity- and stock index-linked derivatives sales and brokerage, proprietary trading and brokerage services for futures involving interest rates, currency and commodities, as well as foreign exchange margin trading. Products and Services Shinhan Securities provides principally the following services: Retail Client Services: These services include equity and bond brokerage, investment advisory and financial planning services to retail customers, with a focus on high net-worth individuals. The fees generated include brokerage commissions for the purchase and sale of securities, asset management fees, interest income from credit extensions (including in the form of stock subscription loans), margin transaction loans and loans secured by deposited securities. Institutional client services: Brokerage Services: These services include brokerage of stocks, corporate bonds, futures and options provided to Shinhan Securities’ institutional and international customers and sale of institutional financial products. These services are currently supported by a team of approximately 60 research analysts that specialize in equity, bonds and derivatives research. Investment Banking Services: These services include a wide array of investment banking services to Shinhan Securities’ corporate customers, such as domestic and international initial public offerings, mergers and acquisitions advisory services, bond issuances, underwriting, capital increase, asset-backed securitizations, issuance of convertible bonds and bonds with warrants, structured financing, issuance of asset-backed commercial papers and project financings involving infrastructure, real estate and shipbuilding. Shinhan Securities also engages, to a limited extent, in proprietary trading in equity and debt securities, derivative products and over-the-counter market products. With respect to brokerage services, in the face of intense competition in the domestic brokerage industry, Shinhan Securities primarily focuses on strengthening profitability through service differentiation and efficient management of its distribution network rather than enlarging its market share indiscriminately through lowering fees and commissions. Shinhan Securities’ service differentiation efforts include offering its customers opportunities to purchase stocks in a wide range of countries (more than 29 countries), leveraging synergy opportunities afforded by affiliation with other Shinhan entities, such as offering brokerage accounts maintained at Shinhan Bank and Shinhan Capital. With respect to investment banking services, Shinhan Securities concentrates on equity capital markets, debt capital markets, project finance and mergers and acquisitions. To a limited extent, Shinhan Securities also engages in private equity investments through formation of private equity funds by soliciting investors on a private placement basis. To better serve its international customers, Shinhan Securities has established four overseas service centers in Hong Kong, New York, Vietnam and Indonesia. In July 2015, the company acquired a 100% stake in Nam An Securities (subsequently launched as Shinhan Securities Vietnam Co., Ltd.), a Vietnamese securities services firm that provides investment banking and asset management services. In addition, in order to capitalize on the rapid growth opportunity and as part of its expansion efforts in Indonesia, Shinhan Securities acquired a 99% stake in PT Makinta Securities, an Indonesian investment banking firm in July 2016 and subsequently launched it as an overseas subsidiary offering investment banking and brokerage services under the name PT Shinhan Sekuritas Indonesia in December 2016. In 2018, the company acquired PT Archipelago Asset Management, the first acquisition of an Indonesian asset management firm by a Korean financial group. Life Insurance Services The company provides life insurance products and services primarily through Shinhan Life Insurance. Shinhan Life Insurance provides services through diversified distribution channels consisting of financial planners, telemarketers, agency marketers and bancassurance specialists. Products and Services Shinhan Life Insurance provides principally the following services: Life insurance: Shinhan Life Insurance develops products that are marketed to customer bases in various age groups through tailored marketing strategies and in-depth analysis of customer databases, backed by support for and training of competent insurance consultants. For example, Shinhan Life Insurance has launched innovative products that offer customized underwriting and premium options. General agent (GA): Shinhan Life Insurance acquired reputable GA organizations to lay the foundation for stable growth within the GA market. Healthcare Service: As part of the efforts to grow its non-insurance services, Shinhan Life Insurance’s healthcare services help bring in new customers by giving them access to a wide range of content based on their platform. To better serve its international customers, Shinhan Life Insurance established Shinhan Life Insurance Vietnam Co., Ltd. in Vietnam which began its business operations in January 2021. In response to the implementation of IFRS 17, Shinhan Life Insurance has updated its management strategies, settlement process and internal control systems. In addition, Shinhan Life Insurance upgraded its insurance risk measurement system in anticipation of a new regulatory solvency regime for insurance companies, the Korean-Insurance Capital Standard (the K-ICS). Non-Life Insurance Services The company provides a wide range of general insurance products through Shinhan EZ General Insurance. Shinhan EZ Insurance was established as Daum Direct Car Insurance. On June 30, 2022, the company acquired BNP Paribas Cardif General Insurance and changed its name to Shinhan EZ General Insurance. General insurance products offered by Shinhan EZ General Insurance include collateral protection insurance, motor insurance, SMART repair and extend warranty. Shinhan EZ General Insurance also intends to switch to a digital insurance business model. Shinhan EZ General Insurance aims to offer innovative insurance products suitable for collaboration with startups based on advanced digital channels, in addition to traditional insurance products, such as health, injury, travel and leisure insurance. Shinhan EZ General Insurance is seeking to pursue sustainable growth by creating new business opportunities and collaborating with various startups and the copany’s affiliates and is also planning to expand coverage within the automotive insurance market. Specialized Credit Services The company provides leasing and equipment financing services to its corporate customers mainly through Shinhan Capital. Shinhan Capital provides customers with leasing, installment financing and new technology financing, equipment leasing, and corporate credit financing. Shinhan Capital’s strength has traditionally been in leasing of ships, printing machines, automobiles and other specialty items, but it also offers other leasing and financing services, such as corporate restructuring services for financially troubled companies, project financing for real estate and infrastructure development, corporate leasing and equipment financing. Other Services Through its other subsidiaries, the company also provides asset management, savings banking, loan collection and credit reporting, collective investment administration and financial system development services. Through Shinhan Asset Management, which merged with Shinhan Alternative Investment Management in January 2022 (in addition to Shinhan Securities), the company also engages in alternative investments through formation of private equity funds by soliciting investors on a private placement basis. Asset Management Services In addition to personalized wealth management services provided as part of its private banking and securities brokerage services, the company provides asset management services through Shinhan BNP Paribas Asset Management, formerly a joint venture with BNP Paribas Asset Management Holding, of which it and BNP Paribas Asset Management Holding held 65:35 interests, respectively. On January 15, 2021, the company acquired the remaining 35% interest in Shinhan BNP Paribas Asset Management and changed its legal name to Shinhan Asset Management, and hence Shinhan Asset Management has become its wholly-owned subsidiary as of such date. Shinhan Asset Management ranked fifth among asset managers in Korea in terms of assets under management. As of December 31, 2022, and provides a wide range of investment products, including traditional equity/fixed income funds as well as alternative investment products, to retail and institutional clients. Savings Banking Through Shinhan Savings Bank, the company provides savings banking services in accordance with the Mutual Savings Bank Act to customers that generally would not, due to their credit profile, qualify for its commercial banking services or who seek higher returns on their deposits than those offered by its commercial banking subsidiaries. Shinhan Savings Bank offers savings and other deposit products with relatively higher interest rates and loans (usually in relatively small amounts and on customer-tailored terms and including loans for which the company receives credit support from the Government) primarily to small- to medium-sized enterprises and low income households who would not generally qualify for its commercial banking services. Loan Collection and Credit Reporting The company centralizes credit collection and credit reporting operations for its subsidiaries through Shinhan Credit Information Co. Ltd. (Shinhan Credit Information), which also provides similar services to third party customers. Shinhan Credit Information’s services include debt collection, credit inquiries, credit reporting, civil application/petition services and process agent services, among others. Shinhan Credit Information also manages participants in credit recovery programs and provides support to the Kookmin Happy Fund, which is a Government-established fund that supports retail borrowers with low credit scores by purchasing defaulted loans from creditors or providing credit guarantees to enable such borrowers to refinance at lower rates. Collective Investment Administration Services The company providse integrated collective investment administration services through Shinhan AITAS Co., Ltd. Shinhan AITAS provides general management service, asset management systems, accounting systems and trading systems to asset management companies and institutional investors. The target customers for these collective investment administration services are asset managers, investment advisors and institutional investors, and Shinhan AITAS seeks to provide a comprehensive service package, including the computation of the reference value for funds, evaluation of fund performance, provision of trading systems and fund-related legal administrative services. Alternative Investments To a limited extent, through Shinhan Asset Management, which merged with Shinhan Alternative Investment Management in January 2022, the company also engaged in private equity investments through formation of private equity funds. The private equity funds receive funding from investors on a private placement basis, which funds are then invested in alternative assets and equity securities in companies for a variety of reasons, including management control, business turnaround or corporate governance improvements. Financial System Development Services The company provide financial system development services through Shinhan DS, which offers system integration, system management, IT outsourcing, business process outsourcing and IT consulting services. Real Estate Investment Trust (REIT) Asset Management Through its wholly owned subsidiary, Shinhan REITs Management Co., Ltd., the company rovides real estate investment and management services to real estate investment trusts. Real Estate Trust Services Shinhan Asset Trust Co., Ltd. is a comprehensive real estate trust service provider, providing service,s including land development trust, management trust, proxy and agency businesses and consulting, etc. Artificial Intelligence Based Investment Consulting Shinhan AI. Co., Ltd. is an artificial intelligence-based investment consulting company established to enhance the company’s competitiveness in the digital age and provide differentiated investment consulting services, with plans to expand business into the asset management sector. Venture Capital Investment Shinhan Venture Investment Co, Ltd. is an alternative investment management firm specializing in identifying and investing in start-up companies as well as small to mid-sized companies and also promoting the formation and operation of early stage investment funds and private equity investment funds. Distribution Network The company offers a wide range of financial services to retail and corporate customers through a variety of distribution networks and channels established by pts subsidiaries. The following table presents the geographical distribution of its distribution network based on the branch offices and other distribution channels of its principal subsidiaries, as of December 31, 2022. Banking Service Channels The company’s banking services are primarily provided through an extensive branch network, specializing in retail and corporate banking services, as complemented by self-service terminals and electronic banking, as well as an overseas services network. As of December 31, 2022, Shinhan Bank’s branch network in Korea consisted of 721 service centers, consisting of 521 retail banking service centers (including 25 private wealth management service centers and 118 retail offices), 15 large corporate banking service centers, 53 corporate banking services centers and 132 hybrid banking branches. Shinhan Bank’s banking branches are designed to provide one-stop banking services tailored to their respective target customers. Recently, Shinhan Bank has been actively adopting digital technology to improve operational efficiency of its banking service channels. For example, Shinhan Bank introduced digital kiosks to banking branches, established ‘Paperless Banking’ by replacing paper applications with electronic documents, implemented a robotic process automation system for the automation of certain tasks and processes and increased the volume of client communications through non-face-to-face platforms. Retail Banking Channels In Korea, many retail transactions are conducted in cash or with credit cards, and conventional checking accounts are generally not offered or used as widely as in other countries such as the United States. An extensive retail branch network has traditionally played an important role as the main platform for a wide range of banking transactions. However, a growing number of customers are turning to other service channels to meet their banking needs, such as Internet banking, mobile banking and other forms of non-face-to-face platforms. In response to such changes, Shinhan Bank has recently focused on reorganizing its retail branch network, including shifting, merger or closure of certain branches that are considered redundant. The company’s private banking services are provided principally through private banking relationship managers who, within target customer groups, assist clients in developing individual investment strategies. Corporate Banking Channels Shinhan Bank provides corporate banking services through corporate banking service centers primarily designed to serve large corporate customers and hybrid banking branches designed to serve retail as well as small-business corporate customers. Small- and medium-sized enterprises have traditionally been Shinhan Bank’s core corporate customers and the company plans to continue to maintain Shinhan Bank’s strength vis-à-vis these customers. Self-Service Terminals In order to complement its banking branch network, Shinhan Bank maintains an extensive network of automated banking machines, which are located in branches and in unmanned outlets. These automated banking machines consist of ATMs, cash dispensers and passbook printers. In December 2015, Shinhan Bank introduced digital kiosks, a new generation of automated self-service machines featuring biometric authentication technology and the ability to perform a wide range of services that were not available through traditional ATMs, such as opening new accounts, issuance of debit and check cards, foreign currency exchange and overseas remittance of foreign currency. As of December 31, 2022, Shinhan Bank ATMs, 7 cash dispensers and 224 digital kiosks. Shinhan Bank has actively promoted the use of these distribution outlets in order to provide convenient service to customers, as well as to maximize the marketing and sales functions at the branch level, reduce employee costs and improve profitability. In 2022, automated banking machine transactions accounted for a substantial portion of total deposit and withdrawal transactions of Shinhan Bank in terms of the number of transactions and fee revenue generated, respectively. Digital Banking Shinhan Bank’s digital banking services are more comprehensive than those available at the counter, including services such as 24-hour account balance posting, real-time account transfer, overseas remittance, and loan requests. Shinhan Bank continues to experience a rise in the number of online and mobile banking users. Shinhan Bank began offering online and mobile banking initially to save costs rather than to increase revenues, but it is exploring ways to increase revenues through online and mobile banking. These services offer customers more straightforward and convenient access to banking services without limitations of time and space and offer tailored and customized service to each customer. In February 2018, Shinhan Bank launched SOL a mobile banking application integrating Shinhan Bank’s six previously existing mobile applications. Shinhan Bank began offering an open banking service in October 2019, allowing customers to access accounts, products, and services across multiple banks using only SOL. In November 2019, Shinhan Bank also launched SOL Global, a mobile banking application for foreigners, allowing foreign customers to use open banking and other financial services. In 2020, Shinhan Bank expanded the network of financial institutions accessible through SOL’s open banking service. It implemented upgrades that allowed users to customize the user interface to reflect personal asset management preferences. In addition, Shinhan Bank launched the “MoneyVerse” service in December 2021, which utilizes the financial MyData service and enables customers to transfer assets held in other institutions, such as banks, securities, insurance, pension, real estate, and automobiles, to Shinhan SOL. The service made it possible to conduct an integrated inquiry and management of assets. Shinhan Bank is promoting various efforts to transform SOL into a digital platform that goes beyond a financial service platform and becomes closely connected to customers’ lives. In 2020 and 2021, Shinhan Bank launched the COVID-19 Government relief application service through SOL, allowing users to apply for Government emergency funds through the mobile application. In addition, in February 2020, Shinhan Bank launched a medical insurance claim service on SOL, allowing users to easily submit medical insurance claims by sending photos of supporting documents through the SOL mobile application. In line with the recent trends of live commerce, in October 2020, Shinhan Bank launched SOL Live, a live broadcast marketing stream channel for financial products. Shinhan Bank also promoted digital innovation at its existing offline branches in 2021. For example, customers are greeted by an AI concierge and they can choose to use smart kiosk that enables self-service banking and digital service including remote video consulting. By taking part in the Consumer Electronics Show 2021, Shinhan Bank was able to introduce its innovative branch services and digital service devices such as digital desks that offer AI-powered customer service assistance and live video chat with service representatives to the world. Additionally, in 2022, Shinhan Bank launched New SOL, an upgraded version of SOL that offers enhanced user experience and improved usability. New SOL has been transformed into a banking platform that is specifically designed based on customer feedback gathered during the application’s planning phase. Due to improvements in software framework, the speed of the mobile application has improved substantially, along with the user experience. Chatbots have also been upgraded, and they now have improved multi-tasking capabilities in addressing user requests and inquiries. Shinhan Bank intends to continue introducing a range of innovative technologies that will enhance customer experience and open up new business opportunities, such as face recognition technology for user identity verification and voice banking services powered by artificial intelligence. Shinhan Bank will also continue to focus on security measures for privacy protection and financial crime detection. Also in 2022, Shinhan Bank launched a customer communication channel where customers are invited to submit their ideas on financial and banking services in general and also to post their feedback on the company’s products and services. Overseas Distribution Network The company’s overseas subsidiaries and branches are primarily engaged in trade financing and local currency funding for Korean companies and Korean nationals in the overseas markets, as well as providing foreign exchange services in conjunction with Shinhan Bank’s headquarters. On a limited basis, these overseas branches and subsidiaries also engage in investment and trading of securities of foreign issuers. In the future, as part of its globalization efforts, the company plans to expand its coverage of local customers in the overseas markets by providing a wider range of services in retail and corporate banking, and to that end, it has increasingly established subsidiaries in lieu of branches in select markets and in 2011 merged two of its Vietnam banking subsidiaries in order to enhance its presence and enable greater flexibility in its service offerings in these markets. The company plans to maintain its focus on organic growth, while it may selectively pursue acquisitions in markets where it is difficult to obtain local banking licenses through greenfield entry. In furtherance of this objective, Shinhan Bank acquired a 98.01% stake in Bank Metro Express and a 100% stake in Centratama Nasional Bank, two banks in Indonesia, in November 2015 and December 2016, respectively. Shinhan Bank completed the merger of the two banks in December 2016. Shinhan Bank also opened additional branches in Australia, Myanmar and India in the second half of 2016. In April 2017, Shinhan Bank Vietnam Co., Ltd. acquired ANZ Bank (Vietnam) Limited’s retail division. In 2017, Shinhan Bank became the first Korean Bank to obtain a license to set up a local subsidiary in Mexico and started local business in Mexico in March 2018. The company plans to continue its efforts to expand its overseas banking service network and global operations. Credit Card Distribution Channels Shinhan Card primarily uses four distribution channels to attract new credit card customers, such as the banking and credit card branch network, sales agents, business partnerships and affiliations with vendors, and digital platforms such as Shinhan pLay. As of December 31, 2022, the branch network for the company’s credit card operations consisted of 876 branches of Shinhan Bank and 29 card sales branches of Shinhan Card. The use of the established distribution network of Shinhan Bank is part of the group-wide cross-selling efforts of selling credit card products to existing banking customers. In 2022, the number of new cardholders acquired through the company’s banking distribution network accounted for approximately 16.4% of the total number of new cardholders. As of December 31, 2022, Shinhan Card had 1,372 sales agents, who were independent contractors. These sales agents assist prospective customers with the application process and customer service. As part of a group-wide initiative to streamline the company’s operations and create a digital-friendly business platform, Shinhan Card has strategically expanded its digital platforms. In October 2021, Shinhan Card launched Shinhan pLay, a mobile platform providing consolidated financial and non-financial services. In addition to providing traditional financial services, such as payment, open banking and asset management, as well as services provided through traditional customer service means, such as call centers and website applications, Shinhan pLay also offers a variety of non-financial content, including entertainment, shopping, personal certificates and memberships in order to better provide customized financial services aimed at meeting the comprehensive needs of customers. In addition to providing traditional payment services, Shinhan pLay utilizes digital technology, such as artificial intelligence and big data to provide real-time customized services tailored to individual users and integrated access across services provided by various merchants and affiliates. In November 2014, as an initial step to exploring potential opportunities overseas, Shinhan Card established its first overseas subsidiary in Kazakhstan, LLP MFO Shinhan Finance, as Kazakhstan was deemed to have relatively low entry barriers to foreign financial institutions, high growth potential for retail operations and the possibility of leveraging Shinhan Bank’s network. LLP MFO Shinhan Finance obtained its business license in the first half of 2015 and commenced operations in July 2015, including installment financing and credit loans. In 2018, LLP MFO Shinhan Finance expanded its sales channels and introduced new credit loan products, while in 2019, the company further expanded its sales coverage while enhancing its risk management capabilities. In 2021, LLP MFO Shinhan Finance established a foundation for its automobile finance business through a captive partnership with a local dealership in Kazakhstan. In December 2015, Shinhan Card acquired a majority stake in PT Swadharma Indotama Finance, a multi finance company in Indonesia, and changed its legal name to PT Shinhan Indo Finance. PT Shinhan Indo Finance engages in corporate and retail operations, including installment financing and financial leases, and began offering credit card services in January 2017 after obtaining its credit card business license in December 2016. In 2018, PT Shinhan Indo Finance began to expand its retail business across Indonesia. In 2019, PT Shinhan Indo Finance launched its joint finance product with Shinhan Bank, maintaining a conservative approach to its retail business while steadily increasing its corporate leasing assets, particularly corporate fleet vehicle finance products. In 2020, PT Shinhan Indo Finance focused on expanding its fleet business and improving its financial performance. In 2023, PT Shinhan Indo Finance plans to maintain its fleet-centered strategy and also plans to explore additional partnerships for new businesses. In March 2016, to accelerate the company’s global business expansion, it established Shinhan Microfinance, a local subsidiary in Myanmar. Shinhan Microfinance obtained its microfinance business license in July 2016 and launched operations in September 2016. In 2017, it expanded its business operations from Yangon to nearby Bago. In 2018, Shinhan Microfinance increased its assets and profit volume by diversifying the range of microfinance products it offers. In 2019, Shinhan Microfinance actively expanded its sales network and sought long term growth opportunities. In 2020, Shinhan Microfinance has grown significantly despite the spread of COVID-19 by expanding its branch network and launching new products. In 2023, Shinhan Microfinance plans to focus on risk management to achieve stable growth amidst the continued instability from the COVID-19 situation. In January 2018, Shinhan Card acquired Prudential Vietnam Finance Company Limited in order to gain a stronger presence in Vietnam and increase synergy with Shinhan Bank and Shinhan Securities’ Vietnam operations. In July 2019, Shinhan Card changed its legal name into Shinhan Vietnam Finance Company Ltd. (Shinhan Vietnam Finance Company). Securities Brokerage Distribution Channels The company’s securities brokerage services are conducted principally through Shinhan Securities. As of December 31, 2022, Shinhan Securities had 81 service centers nationwide, and four overseas subsidiaries based in Hong Kong, New York, Vietnam and Indonesia to service the company’s corporate customers. Approximately 60% of the company’s brokerage branches are located in the Seoul metropolitan area with a focus on attracting high net-worth individual customers, as well as enhancing synergy with its retail and corporate banking branch network. The company plans to continue to explore new business opportunities, particularly in the corporate customer segment, through further cooperation between Shinhan Securities and Shinhan Bank. Insurance Sales and Distribution Channels The company sells and provides its insurance services primarily through Shinhan Life Insurance. In addition to distributing bancassurance products through its bank branches, also distribute a wide range of life insurance products through their own branch network, agency network of financial planners and telemarketers, as well as through the Internet. As of December 31, 2022, Shinhan Life Insurance had 218 branches and 9 customer support centers. These branches are staffed by financial planners, telemarketers, agent marketers and bancassurance to meet the various needs of the company’s insurance and lending customers. The company’s group-wide customer support centers arrange for policy loans (namely loans secured by the cash surrender value of the underlying insurance policy) for its insurance customers and, to a limited extent, other loans to other customers, and also handles insurance payments. Competition In the banking sector, Shinhan Bank competes principally with other national commercial banks in Korea, but also faces competition from a number of additional banking institutions, including branches and subsidiaries of foreign banks operating in Korea, regional banks, Internet-only banks, government-owned development banks and Korea’s specialized banks, such as Korea Development Bank, the Industrial Bank of Korea and the National Federation of Fisheries Cooperatives, as well as various other types of financial service providers, including savings institutions (such as mutual savings and finance companies, credit unions and credit cooperatives), investment companies (such as securities brokerage firms, merchant banking corporations and asset management companies) and life insurance companies. Supervision and Regulation Under the Depositor Protection Act, all banks governed by the Banking Act (Banking Act of 1950, as amended), including Shinhan Bank and Jeju Bank, are required to pay to the Korea Deposit Insurance Corporation an insurance premium on a quarterly basis at such rate as determined by the Presidential Decree to the Depositor Protection Act, which shall not exceed 0.5% of the bank’s insurable deposits in any given year. As a substantial majority of the company’s and its subsidiaries’ operations are in Korea, the company is primarily subject to the regulations and supervision of the Financial Services Commission and the Financial Supervisory Service. Shinhan Bank maintains an uninsured branch in New York, which is licensed by the New York State Department of Financial Services (the ‘Department’) and registered with the banking authority of Korea. Shinhan Bank’s New York branch is subject to regulation and examination by the Department under its licensing authority. In addition, the Board of Governors of the Federal Reserve System (the ‘Federal Reserve Board’) exercises examination and regulatory authority over Shinhan Bank’s U.S. branch. The company also owns a non-member state chartered bank, Shinhan Bank America, which is regulated by the Department, as its chartering authority, and by the Federal Deposit Insurance Corporation (FDIC), as its primary federal banking regulator and as the insurer of its deposits. The company is also a financial holding company and a bank holding company under the U.S. banking laws and its U.S. operations are subject to regulation, supervision and enforcement by the Federal Reserve Board. In addition to the direct regulation of Shinhan Bank’s U.S. branch by the Department and the Federal Reserve Board, because the company operates a U.S. branch and has a subsidiary bank in the U.S., the company’s nonbanking activities in the United States are subject to regulation by the Federal Reserve Board pursuant to the International Banking Act of 1978, the Bank Holding Company Act of 1956 (the ‘BHC Act’), and other laws. The company has elected to be a ‘financial holding company’ under the BHC Act. To maintain the company’s financial holding company status, the company and its U.S. subsidiary bank located in New York are required to be ‘well capitalized’ and ‘well managed’; the company’s U.S. branch is required to meet certain examination ratings; and the company’s subsidiary bank in New York is required to maintain a rating of at least ‘satisfactory’ under the Community Reinvestment Act of 1977 (the ‘CRA’). The Dodd-Frank Wall Street Reform and Consumer Protection Act (the ‘Dodd-Frank Act’), which was enacted on July 21, 2010 in response to the financial crisis, impacts the financial services industry by addressing, among other issues, systemic risk oversight, bank capital standards, the liquidation of failing systemically important institutions, over-the-counter and cleared derivatives, the ability of banking entities, including non-U.S. banks with branches in the U.S., like the company, to engage in proprietary trading activities and invest in hedge funds and private equity funds (the so-called Volcker rule), consumer and investor protection, hedge fund registration, securitization, investment advisors, shareholder ‘say on pay’, the role of credit-rating agencies, and more. Shinhan Bank America, a state chartered bank that is located in New York and is not a member of the Federal Reserve Board, is subject to extensive regulation and examination by the Department, as its chartering authority, and by the FDIC, as the insurer of its deposits and as its primary federal banking regulator. Shinhan Bank America must file reports with the Department and the FDIC concerning its activities and financial condition, in addition to obtaining regulatory approvals prior to entering into certain transactions, such as establishing branches and mergers with, or acquisitions of, other depository institutions. The Department and the FDIC periodically examine the bank to test Shinhan Bank America’s safety and soundness and its compliance with various regulatory requirements. Shinhan Bank America derives its lending, investment and other authority primarily from the applicable provisions of New York State Banking Law and the regulations of the Department, as well as FDIC regulations and other federal laws and regulations. Shinhan Bank America’s deposits are insured by the FDIC. In connection with its lending activities, Shinhan Bank America is subject to a variety of federal laws designed to protect borrowers and promote lending to various sectors of the economy and population. Included among these are the Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act, Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, and CRA. Shinhan Bank America is also subject to provisions of the New York State Banking Law, which impose similar obligations to serve the credit needs of its assessment areas. Shinhan Bank America has received ‘satisfactory’ ratings from both the Department and the FDIC in its CRA performance evaluation. Shinhan Bank America’s authority to engage in transactions with related parties or ‘affiliates’ (i.e., any entity that controls or is under common control with an institution) is limited by Sections 23A and 23B of the Federal Reserve Act. Shinhan Bank America’s authority to extend credit to executive officers, directors and 10% shareholders, as well as entities controlled by such persons, is governed by Regulation O of the Federal Reserve Board. In the United States, Shinhan Investment America Inc., the company’s U.S.-registered broker-dealer subsidiary, is subject to regulations that cover all aspects of the securities business, including sales methods, trade practices among broker-dealers, use and safekeeping of clients’ funds and securities, capital structure; record-keeping, the financing of clients’ purchases, and the conduct of directors, officers and employees. Shinhan Investment America Inc. is regulated by a number of different government agencies and self-regulatory organizations, including the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The company’s U.S. subsidiaries are also regulated by some or all of the New York Stock Exchange (NYSE), the Municipal Securities Rulemaking Board, the U.S. Department of the Treasury, the Federal Reserve Board and the Commodities Futures Trading Commission. In addition, the U.S. states, provinces and territories have local securities commissions that regulate and monitor activities in the interest of investor protection. Investment Portfolio As of December 31, 2022, the company’s investment portfolio included equity securities; and debt securities, such as Korean treasury and governmental agencies, debt securities issued by financial institutions, corporate debt securities, debt securities issued by foreign government, and mortgage-backed and asset-backed securities. History Shinhan Financial Group Co., Ltd. was founded in 1982. The company was incorporated in 2001.