Value context and insight. lkm@koreatimes.co.kr
Hana Bank expands to Hungary
Hana Bank CEO Lee Seung-lyul / Courtesy of Hana Bank
By Lee Kyung-min
Hana Bank will establish a regional office in Budapest, Hungary, in the first quarter of this year, according to the lender, Tuesday.
The move is driven by the increasing financial needs of Korean battery makers seeking expansion in the key logistics and manufacturing hub of Europe's electric vehicle (EV) industry.
The Central European country is home to the EV manufacturing plants of leading German premium automakers, including Mercedes Benz, BMW and Audi. Korea’s top battery makers, including Samsung SDI and SK On, built production facilities nearby, alongside their partner suppliers. As of 2022, Hungary was the world’s fourth-largest battery producer after China, Poland and the U.S.
Also advancing growth prospects is Korea becoming the top investment partner of Hungary. According to the Hungarian Investment Promotion Agency (HIPA), Korea remained the East European country’s largest foreign investor in 2022 with a commitment of 2.8 billion euros (4.06 trillion won). Korea topped Hungary's list of inbound foreign direct investment (FDI) partner countries for the third time, after 2019 and 2021. In 2022, 73 percent of Hungary's foreign investments were for the EV industries and 43 percent was battery-related.
Last year, Korea invested nearly 2 billion euros in Hungary. It was the second-largest source of FDI after China. The third- and fourth-largest FDI partners were Germany and the U.S., respectively.
Hana Bank headquarters in Seoul / Courtesy of Hana Bank
Awating approval
Hana Bank said it recently submitted an application to Hungary’s central bank to open an office in Budapest.
“Our Budapest office is expected to assist Korean battery businesses inking deals, as aided by market research and local business networking organization,” a Hana Bank official said.
Hana is the third Korean commercial lender to enter Hungary. Shinhan and Woori set up offices there in 2021. State-run lender Korea Development Bank also has a subsidiary in Hungary.
The Budapest office raises the number of Hana’s overseas offices to 26. Its latest overseas expansion was the establishment of a Taiwan branch in April of 2022.
Whether Hana will be able to clinch deals similar to one made by Shinhan remains to be seen.
In December of last year, Shinhan entered into a global syndicated loan agreement of 65 million euros with the Korea Trade Insurance Corp. (K-Sure) and the Hungarian branch of ShinHeung SEC, a Korean manufacturer specializing in rechargeable battery parts.
Korea Trade-Investment Promotion Agency (KOTRA) said in a report that Hungary, unlike other European peers, remains open to investments from Korea and China.
Hungary is referred to as “a place where Western European auto manufacturers and East Asian battery manufacturers meet,” according to the KOTRA report.
The stability of Korean businesses in the European country will be determined largely by the speed at which infrastructure is established to facilitate manufacturing, the report said.
The report highlighted that Korean battery makers face a variety of challenges, including the imperative need for localization to meet customer demands.