Going global - Woori Bank focuses on expanding presence in emerging nations
By Kim Jae-won
Woori Bank is planning to establish four new branches in emerging nations this year and convert some of its existing foreign offices into permanent units as it looks to strengthen its presence in global markets.
The bank, the flagship unit of the country’s largest finance group, Woori Financial, is currently awaiting regulatory approval from the Financial Service Commission (FSS) for the new branches in India, Brazil, Australia and Russia.
An obvious target for the bank will be the Korean companies and expatriates that are doing business in those economies, according to Woori officials. Finding new growth overseas is crucial for Woori as it continues to face intense competition in a nearly saturated domestic market.
“We will open our branch in St. Petersburg, Russia as early as in the first half of this year if we get a nod from the FSS,” said Kim Hong-joo, senior manager of overseas business team of Woori. “We will also launch outlets in Chennai in southern India, Sao Paulo and Sydney during the second half.”
Korean banks have been finding increasing demand in the aforementioned cities. Hyundai-Kia Automotive Group, Korea’s largest automaker, established a $500 million, full-scale vehicle production plant in St. Petersburg last September and plans to be producing 105,000 cars by the end of 2011 and 150,000 annually starting from 2011. Hyundai-Kia also operates a plant in Chennai, which produced 600,000 vehicles in 2010.
Sao Paulo is another market with lucrative potential. More than 50,000 Koreans are either living or working in the city, thanks to the presence of Korean technology firms like Samsung Electronics and LG Electronics.
Sydney also has a significant population of Korean expatriates, but Woori’s branch could be the first of any Korean bank to set up there.
Targeting Korean expats, locals
In expanding overseas, Woori doesn’t plan to rely too heavily on mergers and acquisitions (M&As) and instead will focus on achieving organic growth first. Targeting Korean companies and expatriate businessmen will be the first step, Woori officials said, before the bank expands its focus to include locals and international firms.
Woori is expecting an immediate demand in corporate financing in those countries, thanks to the presence of Korean conglomerates, although in the long-term, establishing its presence in retail and investment banking in those countries would be crucial.
Intending to choose its markets carefully Woori won’t be establishing a slew of foreign branches over a short period. Woori chief executive officer (CEO) Lee Chong-hwi said the bank is also exploring M&A opportunities in Southeast Asian nations like Cambodia and Vietnam.
“Southeast Asian nations have a significant upside. Many Korean companies are doing business throughout the region and the number of Korean expatriates living there is increasing,” Lee said in an interview with The Korea Times last month.
Reaping fruits from China
Woori became the first Korean bank to establish a subsidiary in China when it launched Woori Bank China in 2007. It began Internet banking services in China in the years following and was approved to provide financial services in yuan, the local currency, from authorities in Beijing.
Currently, Woori Bank China provides every type of banking service just as its homegrown rivals do and the company is also inspired by the results of its localization efforts.
More than 56 percent of Woori Bank China’s customers are locals, and the company has just opened its 14th branch in the town of Dairen in Liaoning Province, with Woori CEO Lee participating in its inauguration.
Woori currently has a presence in 53 nations, including 12 branch offices and five corporations. Most of the business units are in Asia, the Middle East and the United States, where the bank has 50 outlets.
Branch in North Korea
Woori is the only local lender with a branch in North Korea. The bank has run the outlet at the Gaeseong Industrial Complex where South Korean companies have operated factories by hiring cheap North Korean labor since December 2004. It is located about a two hours’ drive from Seoul to the North Korean city.
It provides various banking services, including foreign exchange services for the companies in the complex. South Korean companies exchange Korean won to U.S. dollars in which the North Korean employees get paid.
The lender also had run a temporary FX market in a resort in Sokcho, Gangwon Province for South Korean families, who were staying there to visit Mt. Geumgang in North Korea for family reunions in October 2010. It helped the 200 families exchange Korean won to U.S. dollars for their tour expenses in the North.
To celebrate the joy of the families in their reunions, the lender discounted the exchange fees by 50 percent and presented all customers with a small gift while it was operating.
“We are happy to provide the services for the separated families. We will always be with Koreans when they need us,” said a Woori employee.