Shinhan Bank is the descendant of Hanseong Bank, the first modern bank in Korea. It was established by Kim Jong-Han in 1897, but began operating around 1900. It was originally located in a small house with only two rooms. One room was for the president, Yi Jae-Won, and the other room was for the staff. The bank operated by borrowing money from Japanese banks at low interest rates and then loaning it out for twice the rate to the Korean market. The Bank was successful because despite lending out money at twice the rate it borrowed it at, the bank's interest rates were still far lower than what could be obtained elsewhere in Korea at that time.
In an anecdotal story the bank's first property to use as collateral on a loan happened to be a donkey. The bank staff were challenged to feed and care for their collateral as the loan was out.The bank's early president, Yi Jae-won was a Japanese sympathizer. The bank itself was also had close ties with Japan as that was their parent lender. As a result the bank was often the victim of nationalist backlash, but endured, thanks in part to the low interest rates they provided.