Financial firms accelerate East Asia advancement

By Kim Jae-kyoung

Local financial firms are rolling up their sleeves to speed up globalization as Asia’s emerging market economies have continued to grow with the global financial crisis fading.

The moves to expand overseas presence are seen as their attempts to get the upper hand in the promising markets and find new growth engines abroad, as the local financial market has reached saturation point.

Four major banks and leading insurance companies have planned to increase their oversea presence next year by setting up more branches in emerging markets, such as China and Vietnam, or taking over local firms there.

Kookmin Bank has decided to open its branch in Osaka, Japan, next year, while upgrading its representative office in Ho Chi Minh City, Vietnam, to a branch. It recently applied to the Vietnamese regulator for approval. It is also considering opening an office in Mumbai, India.

Woori Bank plans to open a branch in Saint Petersburg, Russia, and to upgrade its Chennai office in India to a branch in 2011. It plans to turn its Sao Paulo office in Brazil into a subsidiary. It is also considering opening a branch in Sydney, Australia.

Shnhan Bank has decided to focus on four overseas markets ― Japan, China, Vietnam and the United States. In Japan, China and Vietnam where it has subsidiaries, the bank plans to open more branches, while seeking to take over a local bank in one of the Southeast Asian countries.

Hana Bank plans to increase the number of branches of its Indonesian subsidiary. It currency has 19 branches there. It has applied to the local financial regulator for turning its Ho Chi Minh City office into a branch.

Korean insurers are also seeking to make forays into overseas markets as there exists little room for growth in the domestic market.

Samsung Life, the nation's largest life insurer, plans to open more branches in China. In order to enhance the sales business there, the insurance arm of Samsung Group plans to establish a branch of Samsung Air-China Life Insurance in Beijing. Samsung Life and Air China Group established the 50-50 joint venture in 2005.

"The move is aimed at strengthening our sales activities there by clarifying the role of the headquarters and the sales branch," a Samsung Life official said.

Samsung Fire & Marine, a non-life insurance affiliate of Samsung Group, plans to expand its presence in Europe by turning its London office into a subsidiary. It also plans to make inroads into Singapore by taking over a local insurer there.

Hyundai Marine & Fire is pushing for the establishment of a re-insurance broker in Singapore next year by forming an alliance with a Japanese re-insurance broker.

Dongbu Insurance will enter the Vietnamese market next year. It plans to open an office in Ho Chi Minh City in April after recently receiving approval from the Vietnamese financial regulator.

Shinhan Life, a subsidiary of Shinhan Financial Group, has recently conducted a feasibility study on the Vietnamese market. The insurer seeks to capitalize on networks of the group’s other subsidiaries there. Shinhan Bank, the flagship of the group, currently has two subsidiaries in the market, while Shinhan Card plans to begin a credit card business in May.

Market analysts have expressed concerns that local financial firms' uphill competition to go abroad could increase costs and thus worsen their profitability. In addition, they said that reckless overseas expansion can make the firms more vulnerable to external shocks from abroad.