Banks eye more growth in overseas markets

By Kim Jae-won

This year, competition and overseas expansion are shaping up as key strategies for Korean financial groups.

The top four ― KB, Woori, Shinhan and Hana ― may have their own reasons to increase their competitiveness and expand overseas but it all boils down to a matter of survival.

Kookmin Financial Chairman Euh Yoon-dae said in his New Year address that he plans a merger and acquisition and increase the portion of profits from its nonbanking business from 5 percent to 30 percent.

“I expect this blueprint to be put into action in one or two years when our banking group is operationally normalized,” Euh said.

Kookmin Chief Executive Min Byong-deok said the lender will enforce its strong points as well as compensate where it was relatively weak.

“We will stabilize our strengths, such as retail banking, funds, bankasurance, and pensions,” said Min in his New Year address, Monday. “We will also increase our portion in corporate banking and the foreign exchange market.”

Kookmin plans to launch five new branches overseas. The biggest lender in the nation by assets has geared up for overseas business since the lender’s holding company KB’s Euh took the helm of the financial services company in July 2010.

Lee Pal-sung, Woori Financial chairman, said in his New Year address that his group will be pitted against other financial providers for the position of a leading bank. “When Hana completes the takeover of Korea Exchange Bank (KEB), all will go for broke for the leading position.”

He added that he was sure that the Woori privatization will be completed this year. Woori is trying a self-buyout by employees and its friendly financial investors.

The Woori chief set its goal to achieve 1.8 trillion won in net profit this year, up 80 percent from 2010’s estimated net income of 1 trillion won.

To make it come true, Woori CEO Lee Chong-hwi set his New Year’s motto as “Find a way, or make one.” He also asked employees to attract new customers as well as take care of current consumers.

“First of all, we need to increase the number of customers. That is the basic of basics in the banking business,” said the 61-year-old banker.

Lee advised employees to do their utmost to attract new customers, and provide better services for current ones.

Shinhan’s new CEO emphasized retaining trust from customers as the lender suffered from its internal feud, which made the top three executives of the lender and its holding company resign.

“We learned the importance of trust in banking business,” said Suh Jin-won, former head of Shinhan Life Insurance, who took the helm of the lender last week.

Suh said the third-largest lender in the nation will go back to basics to achieve customers’ trust again.

“We will focus on our basic mission, which is to manage customers’ assets based on honesty and trust.”

Hana is expected to join the major lenders’ group as it aims to complete its merger with Korea Exchange Bank (KEB) by March.

“I want to name 2011 as the first year of the ‘Global Top 50’ for Hana,” said Kim Seung-yu, chairman of Hana Financial Group, a parent company of the lender. The 67-year-old chairman has led the group and the lender for two decades since its establishment in 1991.

“It is a crucial moment for us to leap forward as a global player as we will complete buying the KEB stake by early this year.”

KEB CEO Larry Klane did not release any New Year address, but the lender’s labor union demonstrated at the main office of the Financial Services Commission in Yeouido, central Seoul asking the financial regulator to disapprove Hana Financial’s attempt to buy KEB’s controlling 57 percent stake.

State-owned financial firm KDB Financial Group plans to seek merger and acquisition (M&A) deals and make inroads into the credit card sector this year, the group chairman said.

“KDB Financial will push for new entry into the credit card business and continue to seek M&As in order to take over a network for retail financing,” Chairman Min Euoo-sung said in a New Year’s message to employees.

A number of banks plan to increase their overseas branches this year, including Kookmin by five, Hana by four, and Shinhan, KEB, KDB and IBK by three each. By the end of June last year, Korean banks operated 127 overseas branches in 32 countries.