ING Bank in Korea: 20 years and growing

Dutch bank offers unique kind of niche services for big Korean firms

By Oh Young-jin

ING Bank marks its 20th anniversary of doing business in Korea today and sees the country as continuing to drive its revenue growth.

Despite uncertainty in its home market in Europe and elsewhere in the world, the bank says it views the Korean economy with cautious optimism and expects cross-border investments involving its Korean corporate clients to increase.

In its 20 years here, the bank’s Korean operation has charted its way through rough times and smooth, weathering the Asian financial crisis in the late 1990s and participating in the overseas investment drives of the top local conglomerates.

For some time, the Dutch bank has been one the foreign institutions that has piqued the curiosity of local bankers and economic planners.

The fascination for Koreans, who conceive of the country as small, is that this global bank hails from a country that really is small. The population of the Netherlands is around the same as Seoul and Busan combined. ING is its only bank with a wholly-owned international network.

These origins are reflected in the logo of the orange lion, orange being the Dutch national color and the lion the national symbol. Established in 1743 as Kooger Doodenbos, the bank started life providing financial services to Dutch companies trading in Asia in the colonial period.

The name, which came through a merger in 1991, is an abbreviation for International Netherlands Group.

Like most, ING was sideswiped by the global financial crisis. As a condition for European Commission approval of its 10 billion euro rescue by the Dutch government in 2008, ING Group agreed to separate its banking and insurance operations.

Operationally that separation has been done and the formal separation will happen in 2013 with the bank retaining the brand name and the orange lion. ING meanwhile has repaid 7 billion euro and it aims to fully repay the aid by May 2012.

Building deep relationships in Korea

ING Bank this week marks its 20th anniversary of doing business in Korea. It started life 20 years ago this month as NMB Postbank, and grew with the immediate acquisition of Lloyds Bank Seoul and then, in 1995, Baring Securities (sold to Macquarie in 2004).

Among its 75 employees in Seoul, two have been with the bank from the start and several others have been working with current clients since the mid-to-late ‘90s.

In those early days, the Korean financial market was very different from today from the perspective of foreign players. “It was much smaller and more highly regulated, and the environment was different,” recalled Peter Thorn, a former senior banker in Seoul. “Korea was a big borrower and wanted to induce foreign capital. But foreign investment per se was often regarded as ‘hostile.’ Foreign banks could lend to the chaebol but were very limited in what else they could do. The equities, bond and property markets, for example, were all closed to foreigners.”

For ING Bank, clients were primarily European firms trading or investing in the Korean market. As the country began to look outward, that pattern began to shift and today the clients are mostly Korean.

“Given the international role of the top chaebol, Korea is a key focus for the bank’s Asian business and likely to become even more so in the near future,” said Jeroen Plag, ING Bank’s country manager in Seoul. “We offer local business groups quality access to our European network, and vice versa, and we are also increasingly playing a role in intra-Asia cross-border investment. For example, we advise the chaebol and government entities we work with on investments in Indonesia, the Philippines, Australia and Mongolia.”

“In two decades here, we have developed very deep local relationships,” Plag said. “Client-centricity is embedded within our teams at all times. This may sound like a typical corporate slogan but it is a crucial feature of our overall approach. In Asia generally and certainly in Korea, you need to demonstrate your competence and trustworthiness over time.”

Although counter-intuitive in the services industry, another feature of ING’s approach is its fussiness about who it works with. “We are actually selective in choosing our customers,” Plag said. “That is because once we start a relationship, we tend to stick around for a long time.”

Niche focus

Rather than be all things to all men, ING Bank believes in a core strategy of focusing on what it is good at.

In the financing sector, for example, it limits itself to areas it believes position the bank to capture the growing financing needs in Korea. The bank has experts in financial markets, structured finance and cross border corporate and project finance advisory.

In 2010, ING Bank was recognized by Asia Risk Interdealer, a finance magazine, as top dealer in Korea in currency options, currency forwards, non-deliverable forwards, and second in cross-currency swaps.

Similarly, in its corporate finance activities, ING Bank claims to focus on areas where it believes its expertise can make a difference. Its niches in Korea and Asia lie in working with other financial institutions, in international trade and export finance, and in sectors such as utilities and infrastructure, natural resources, transport and logistics, and telecommunications, media and technology.

A reverse side of this expertise, Plag says, is that his team is not shy about telling clients when it feels it cannot help them, or give them the best kind of advice and support the market has to offer.

This strong and focused knowledge in related industries is well matched to Korea’s ongoing drive to become more self-sufficient in its natural resources supplies. “We have hired sector specific talent that gives us a very competitive edge in these specialty areas,” Plag said.

Going forward, ING Bank says it is committed to grow and invest in Korea. “We consider Asia a growth opportunity and Korea in particular a vital market. Our plan is for strategic expansion in selective business segments where we can be relevant and with the aim to maximize value for clients,” Plag said.