By Kim Tae-jong
Major Korean banks have expanded their presence in Japan by attracting more Japanese companies and individual customers.
Total assets at their Japanese branches have risen fast over the past few years since they shifted the focus of their businesses to ethnic Japanese and Japanese firms from Korean firms operating there. They have secured Japanese customers by simplifying lending practices.
Total assets at KB Kookmin Bank’s branch in Tokyo reached 95 billion yen (1.36 trillion won) in June, up from 67.5 billion yen at the end of 2009. On the back of the rapid growth of its first branch, the bank opened a second branch in Osaka on Aug. 9.
The bank said fast localization helped their business growth in Japan.
“We have launched very aggressive marketing campaigns,” an official from KB Kookmin Bank said. “Especially, we tried to localize our business there by targeting not only Korean-Japanese and Korean firms but also ethnic Japanese and Japanese corporations.”
Other local banks, which operate branches in Japan, have also grown in recent years.
Total assets of the Industrial Bank of Korea’s branch in Tokyo also jumped to 79.8 billion yen from 64.7 billion yen in the same period.
Total assets at Korea Exchange Bank’s branches there increased to 70.9 billion yen from 58.2 billion while Woori Bank increased its total assets by 5.4 billion yen in its Tokyo branch over two years.
Shinhan Bank Japan, which is a Japanese subsidiary of Shinhan Bank, also increased its total assets to 463.1 billion won in March, up from 369.2 billion two years ago.
“We don’t think we have achieved success in Japan yet,” an official from Shinhan Bank said. “But we’ve been gearing up for localization and seen some good signs for business success there.”
The rapid growth has gained attention because it came during a prolonged economic slump in Japan and lingering global market uncertainties.
Experts said that Korean banks have successfully found a niche market in which they can compete with Japanese banks. They focus on finding Japanese firms which are fundamentally healthy but have temporary difficulty taking out loans despite good credit ratings.
“We carefully select borrowers with relatively good credit ratings who have difficulties in taking out loans from local banks,” another official from Woori Bank said. “We believe local banks are doing well overseas better than global banks in Korea.”
Market insiders also said the local banks’ success is largely attributed to the Koreans’ famous “ppali ppali” culture, which loosely translates to “hurry hurry.”
“Japanese banks have very complicated procedures for loans, which leads to borrowers waiting for a long time, but branches of local banks meet the demand by shortening procedures,” a market insider said.
Beyond the nearly-saturated local financial market, financial firms are seeking to increase overseas operations by opening branches or taking over a local bank there.
The Financial Supervisory Service, which supports domestic financial firms to advance into overseas markets, said local banks among other financial firms have increased revenue in Asian markets.
“Amid the global financial crisis, of course, local financial firms have faced a difficult time in expanding their business scope overseas, but some of them, especially banks, have been successful for their aggressive marketing and fast localization,” an official from FSS said.