By Na Jeong-ju
Staff Reporter
Woori Bank, the nation's second largest lender by assets, said Monday it had set up a wholly-owned subsidiary in China as part of its strategy to expand into the Asian banking market.
Woori Bank, the flagship unit of Woori Finance Holdings, said it launched Woori Bank China Ltd. in Beijing to provide retail banking services in the fast-growing economy. Woori is the first South Korean lender to set up a subsidiary in China.
The establishment of the Chinese unit came amid increasing efforts by South Korean lenders to make inroads into foreign markets as competition heats up on the domestic market. Domestic banks have been suffering from narrower profit margins amid fiercer competition among themselves and non-banking financial firms, and have been under growing pressure to develop business overseas for new growth engines.
``The opening of a Chinese subsidiary means that we are moving one step further toward establishing an Asia-wide network,'' said Park Byong-won, chairman of Woori Finance. ``By 2010, we aim at opening 53 branches in China and raising the number of branches to 200 around the world.''
The bank said it will beef up retailing and private banking services in China. It added it plans to start a debit card business in 2008 before expanding into the credit card market later.
Woori Bank posted a net profit of 244 billion won in the third quarter. The lender currently has 39 branches around the world.
Korean banks overseas have provided services to Korean firms operating in foreign countries and earnings were limited as they had not provided services to retail customers there. Woori's move to provide retail banking services in China is expected to become a litmus test for other banks as to whether Korean banks will be able to localize their businesses abroad.