By Kim Jae-won
The Industrial and Commercial Bank of China (ICBC) hopes to target both Chinese and local customers by expanding its presence in Korea, in line with its efforts to increase its overseas business.
The Beijing-based international lender submitted a letter of intent (LOI) to buy a stake of Kwangju Bank from the Korea Deposit Insurance Corp. (KDIC). The state-run KDIC holds a 57 percent stake in Woori Finance Holdings, the largest financial holding company in the nation by assets, and the holding company has a 99 percent stake in the Gwangju-based provincial lender, which has assets of $20.4 billion as of September.
It is not known how many shares the Chinese lender plans to buy, but it is at least more than the 4 percent minimum requirement for acceptance of an LOI.
ICBC’s Seoul branch did not confirm the report saying it was not part of the branch’s business, but that of the headquarters of the lender.
The biggest lender in the world by market value is also in talks with KB Financial Group for a stock swap. ICBC Chairman Jiang Jianqing met KB Financial Chairman Euh Yoon-dae in Seoul, in November on the sidelines of the G20 Business Summit, where they exchanged their thoughts on the idea.
“About 40 executives from both lenders, including ICBC Chairman Jiang and KB Financial Chairman Euh, discussed swapping shares between the two lenders,” ICBC Seoul branch spokesman Park Nam-sun said. Park added, however, that talks were in their beginning stage, and nothing has been decided yet.
KB Financial head Euh also expressed his interest in exchanging stocks with the Chinese bank. The former chairman of the Presidential Council on Nation Branding said he intended to cooperate with international lenders, including ICBC, to boost the stability of KB Financial.
“I am interested in strategic cooperation with other global lenders. KB Financial seeks to exchange stocks with international lenders, such as ICBC and DBS (Bank) to boost our competitiveness and financial stability,” Euh said in an exclusive interview with The Korea Times in September.
ICBC also opened a new branch in Daelim-dong, western Seoul in August to provide convenient financial services, mostly remittance services, for Chinese workers in the region.
Currently, the Chinese lender has three branches here ― Seoul, Busan and Daelim-dong. The lender launched its Seoul branch in December 1997, and later set up a Busan branch in May 2002 to provide financial services for customers in the southeast port city.
Some analysts say ICBC’s expanding business here is related to the lender’s international strategy. ICBC runs 194 overseas outlets in 27 countries and regions around the world as of September. In the first nine months of this year, the bank's overseas operations contributed $459 million to their net profit, 43.9 percent more than in the same period last year.
Meanwhile, four Chinese lenders ― ICBC, Bank of China, Bank of Communications and China Construction Bank ― operate branches in South Korea, with a focus on foreign exchange and trade finance, according to the Korea Federation of Banks.