KB, Shinhan Set for Duel in Kazakhstan
By Na Jeong-ju
Staff Reporter
Kookmin Bank and Shinhan Bank are putting the final touches to their efforts to begin banking businesses in Kazakhstan with both pledging to become the most trusted financial partner for investors there.
The duel between the country's two largest commercial lenders in the Central Asian nation will mark the beginning of a fierce battle between Korean banks over surging consumer demand for quality financial services in developing markets.
Kookmin CEO Kang Chung-won and Shinhan CEO Shin Sang-hoon both see a tough period of trial and error in embarking on business in Kazakhstan. However, they feel the experience in Kazakhstan will become a good yardstick for their overseas expansion strategies.
``I feel a sense of great responsibility in laying the foundation for Shinhan to become a competitive global bank,'' Shin told reporters in April.
There are clear reasons for the banks to raise the odds in Kazakhstan.
According to the Export-Import Bank of Korea, Korean firms' investment in Kazakhstan rose 10-fold in 2006 from a year ago to $250 million. Most of the investments are centered on construction and energy development.
Since 2000, the country has posted an average 9 percent economic growth, using its abundant resources of oil and natural gas. To achieve sustainable growth, it has opened its doors wider to foreign investors.
In line with the impressive economic expansion and the government's open market policy, demand for financial services has risen sharply.
``Last year, Kazakhstan drew $10.4 billion in foreign investment, and removed various business regulations for foreign firms,'' said Ko Jae-ho, an Eximbank official. ``This is a good time for Korean lenders to set up operations there. The outlook for investment is very bright given the country's robust economic growth.''
Kookmin CEO Kang recently visited the country and met with government officials and representatives of the local financial sector to discuss their business partnership. The bank has unveiled a plan to donate up to $840,000 to a public fund there.
``Recently, we completed a deal to rent an office building in the Kazakhstan capital of Almaty. Preparations have almost been finished to start a business in Kazakhstan,'' a Kookmin official said. It is the second time for Kookmin to open an overseas office after Kang's predecessor, Kim Chung-tae, set one up in Guangzhou, China.
Shinhan is also awaiting approval from financial regulators to establish a local subsidiary in Kazakhstan. The bank has dispatched a team of financial experts to the country to seek business opportunities there.