IBK Moving to Take Over Mid-Tier Bank
By Yoon Ja-young
Staff Reporter
The Industrial Bank of Korea (IBK) is looking to take over a mid-tier local bank to expand deposit, its CEO said.
``We plan to make a leap forward as the number one bank within 10 years by establishing a total financial group specializing in financing small and medium sized firms. Since our deposit base is weak, we are thinking about acquiring a mid-tier bank to make up for it,'' IBK CEO Yun Yong-ro was quoted as saying by Yonhap News Agency.
Yun said the bank will strengthen marketing on private customers, with IBK World, center for private customers, scheduled to open between July and August. He said IBK has to advance into the private customer market as it needs money to do its task ― supporting small and medium sized firms. He pointed out that these businesses deposit money with other banks while coming to IBK for loans.
He said capital increase isn't likely as the government is pushing for privatization of the bank.
Yun said cutting costs has become the fate determinant for banks as they are experiencing a net interest margin (NIM) squeeze. ``It is like banks are competing under the water, to see which one bear out longer. Some might give up within a few years.''
He said some banks have to spend half of the interest income on salaries, with a cost per employee having risen to 100 million won while the NIM hovers at around only two to three percents. IBK, meanwhile, has a competitive edge in cost since it has a smaller number of employees and most of its branches are for business customers, according to Yun. He pointed out that banks are renting large spaces in the main business areas, despite fewer bank operations for private customers done at bank counters. He wondered how long they could last shouldering such huge rents.