By Choi Kyong-ae
The Industrial Bank of Korea (IBK) is considering buying a stake in an Indonesian bank to provide financial services to Korean companies operating there, the bank's chief said in a recent interview.
"In Indonesia, where Korean companies have advanced the most following China and Vietnam, we are considering investing in a local bank after setting up an office this year," bank Chief Executive Kwon Seon-joo told The Korea Times last week.
Currently, 1,255 Korean businesses have operations in the Southeast Asian country and the bank specializes in loans to small and medium-sized enterprises (SMEs).
As the Indonesian government has strict regulations related to multinational financial firms to protect its own financial industry, it is hard to open an office there.
Instead, the Korean bank is looking to acquire a stake in an Indonesian bank as early as this year, a company spokesman said.
"It takes hefty costs to set up a local office in Indonesia and the local government requires a foreign company to start a business with a very large amount of capital," the spokesman said by telephone.
He didn't elaborate on the bank's acquisition plans in Indonesia.
As part of its global expansion strategy, IBK said it is keeping a close eye on whether there is a stake in an Indonesian bank up for auction.
In recent years, the bank has stepped up its drive to help Korean SMEs overcome difficulties in financial services both in advanced and emerging markets.
As Korean SMEs increasingly move into developing markets, such as China, India and Cambodia, the demand for customized financial services is also increasing.
Kwon said, "In countries where we don't have outlets, we are offering financial services to Korean SMEs through local banks with which we have signed a memorandum of understanding (MOU)."
IBK has so far signed MOUs with 14 global banks, which allow the Korean bank to provide its financial services through 68,000 outlets around the world.
IBK has 23 overseas offices in eight countries. But the bank has the only overseas branch in China and it owns an entire stake in the Chinese branch.
Its overseas expansion plans seem to be working. IBK successfully issued global depositary receipts (GDRs) worth 309.2 billion won ($315 million) last month. A total of 38 investors placed an order to buy IBK's GDRs and their combined orders reached 816 billion won, said the bank.
A GDR is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it into the account. GDRs represent ownership of an underlying number of shares.
"We raised 3 trillion won through GDR issuances last month in Luxembourg. It not only boosted our Bank for International Settlements (BIS) ratio by 22 basis points but also allowed us more room to give financial support to Korean SMEs," said the chairwoman who has spent 36 years at the bank.
Meanwhile at home, IBK has a membership of 13.6 million — 12.56 million individuals and 1.04 million corporate clients.
The bank plans to attract more funds from individual customers in order to financially support SMEs. Korean law requires the state-run IBK to lend more than 70 percent of its deposits to SMEs in the form of loans.
At the end of March, the IBK accounted for 23 percent of the SME loan market, leaving others far behind in the segment.
Helped by lower interest rates and other benefits, its corporate membership surpassed the 1 million mark for the first time in December. It means one third of Korean SMEs have deals with IBK. Its accumulated loans to SMEs reached 109 trillion won at the end of 2013, according to the bank data.
"In 2014, we will provide 40 trillion won in financial loans to SMEs, which is up 2 trillion won from a year earlier. We will also help financially troubled companies to regain their foothold in the market," Kwon said.
IBK has already extended 14.3 trillion won in loans to SMEs in the January-April period.
The bank's net profit for the first quarter that ended March 31 rose 27 percent to 326.89 billion won from 257.48 billion won a year earlier, according to a regulatory filing.
When it comes to major projects of the year, she picked the replacement of the current computing systems. The bank will complete the next-generation computing system by November to better serve its customers.
"We have developed an all-new system over the past three years in a 250 billion won project. The new system's official launching date will be Nov. 6 after a four-month test period," she said.
The Industrial Bank of Korea (IBK) is considering buying a stake in an Indonesian bank to provide financial services to Korean companies operating there, the bank's chief said in a recent interview.
"In Indonesia, where Korean companies have advanced the most following China and Vietnam, we are considering investing in a local bank after setting up an office this year," bank Chief Executive Kwon Seon-joo told The Korea Times last week.
Currently, 1,255 Korean businesses have operations in the Southeast Asian country and the bank specializes in loans to small and medium-sized enterprises (SMEs).
As the Indonesian government has strict regulations related to multinational financial firms to protect its own financial industry, it is hard to open an office there.
Instead, the Korean bank is looking to acquire a stake in an Indonesian bank as early as this year, a company spokesman said.
"It takes hefty costs to set up a local office in Indonesia and the local government requires a foreign company to start a business with a very large amount of capital," the spokesman said by telephone.
He didn't elaborate on the bank's acquisition plans in Indonesia.
As part of its global expansion strategy, IBK said it is keeping a close eye on whether there is a stake in an Indonesian bank up for auction.
In recent years, the bank has stepped up its drive to help Korean SMEs overcome difficulties in financial services both in advanced and emerging markets.
As Korean SMEs increasingly move into developing markets, such as China, India and Cambodia, the demand for customized financial services is also increasing.
Kwon said, "In countries where we don't have outlets, we are offering financial services to Korean SMEs through local banks with which we have signed a memorandum of understanding (MOU)."
IBK has so far signed MOUs with 14 global banks, which allow the Korean bank to provide its financial services through 68,000 outlets around the world.
IBK has 23 overseas offices in eight countries. But the bank has the only overseas branch in China and it owns an entire stake in the Chinese branch.
Its overseas expansion plans seem to be working. IBK successfully issued global depositary receipts (GDRs) worth 309.2 billion won ($315 million) last month. A total of 38 investors placed an order to buy IBK's GDRs and their combined orders reached 816 billion won, said the bank.
A GDR is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it into the account. GDRs represent ownership of an underlying number of shares.
"We raised 3 trillion won through GDR issuances last month in Luxembourg. It not only boosted our Bank for International Settlements (BIS) ratio by 22 basis points but also allowed us more room to give financial support to Korean SMEs," said the chairwoman who has spent 36 years at the bank.
Meanwhile at home, IBK has a membership of 13.6 million — 12.56 million individuals and 1.04 million corporate clients.
The bank plans to attract more funds from individual customers in order to financially support SMEs. Korean law requires the state-run IBK to lend more than 70 percent of its deposits to SMEs in the form of loans.
At the end of March, the IBK accounted for 23 percent of the SME loan market, leaving others far behind in the segment.
Helped by lower interest rates and other benefits, its corporate membership surpassed the 1 million mark for the first time in December. It means one third of Korean SMEs have deals with IBK. Its accumulated loans to SMEs reached 109 trillion won at the end of 2013, according to the bank data.
"In 2014, we will provide 40 trillion won in financial loans to SMEs, which is up 2 trillion won from a year earlier. We will also help financially troubled companies to regain their foothold in the market," Kwon said.
IBK has already extended 14.3 trillion won in loans to SMEs in the January-April period.
The bank's net profit for the first quarter that ended March 31 rose 27 percent to 326.89 billion won from 257.48 billion won a year earlier, according to a regulatory filing.
When it comes to major projects of the year, she picked the replacement of the current computing systems. The bank will complete the next-generation computing system by November to better serve its customers.
"We have developed an all-new system over the past three years in a 250 billion won project. The new system's official launching date will be Nov. 6 after a four-month test period," she said.
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