SOUTH KOREA: State-run banks eye overseas expansion for net-zero, corporate financing in 2022.

As published on koreaherald.com, Wednesday 5 January, 2022.

South Korea’s state-run banks are gearing up for major overseas business expansions this year, in line with the global economy adopting measures to return to normalcy from the pandemic.

Korea Development Bank, the nation’s development financial lender that provides local firms risk capital, is likely to upgrade its current office in Frankfurt, Germany, to a branch by the end of the year. KDB Chairman Lee Dong-gull visited Germany in August last year to prepare for the office’s rebranding into a branch, the firm said at the time.

The Frankfurt branch will play a key part in KDB’s road map to net-zero financing goals, Lee said in his New Year’s speech this year.

“By launching our Frankfurt branch and a special desk for venture capital in Europe, we will be able to secure headquarters in areas needed to achieve net-zero finance,” he told his employees.

The KDB’s only European subsidiary at the moment is its Hungary operation, launched in 2002, and it has no other European branches. The subsidiary is the state-run bank’s European headquarters at the moment.

Three out of the five major commercial banks here -- Woori, Shinhan and Hana -- currently have subsidiaries in Frankfurt, indicating their preference to establish European headquarters in Germany’s financial hub.

The plan follow’s KDB launch of VC operations in Silicon Valley, US called KDB Silicon Valley, in November 2021, to finance Korean startups in the world’s largest technology hub.

Another state-run lender, the Export-Import Bank of Korea, has been gearing up to establish its Singapore subsidiary. The Eximbank board in December greenlighted an investment plan for the launch of the subsidiary in the country viewed as the financial gateway to other ASEAN member nations. Once launched, the Singapore subsidiary is expected to play an important part for the Eximbank’s global corporate financing business.

“The Eximbank will become a global finance leader by bolstering its global deal sourcing capability through the Singapore subsidiary, which will be newly established and cooperation with global financial institutions,” Eximbank CEO Bang Moon-kyu said in his New Year’s speech in January.

Meanwhile, the Industrial Bank of Korea has been eyeing Poland for its next global destination. Poland has been attracting global battery manufacturers in recent years and so far more than 200 Korean businesses have entered the Central European market.

Yoon visited Poland in November as part of his business trip to Europe and met with several of his corporate clients there to lend an ear to the hurdles they face with financing. IBK has been reportedly preparing to enter Poland as part of their overseas market expansion since 2018, but the plan has been delayed due to the COVID-19 pandemic.

“In November last year, I visited Poland and other European nations,” Yoon said in his New Year’s speech.

“We will launch a headquarter for Eastern Europe, while drawing additional measures to deal with overseas demand for IBK’s financing.”

While private commercial banks can make more aggressive foray into the global market, state-run banks face more hurdles in doing so, since financial authorities are involved in such decision-making process.

KDB has six subsidiaries, 10 branches and 7 offices under its overseas business. The Eximbank has four subsidiaries in the UK, Hong Kong, Indonesia and Vietnam and 24 offices overseas.

IBK currently operates two overseas subsidiaries in China and Indonesia, with several branches and offices under them. It has branches in nine different cities, including New York City, London, Hong Kong, Hanoi, New Delhi and Manila. Its London branch is the bank’s sole European headquarters for the moment.

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