Major South Korean lenders intend to strengthen their presence in Europe. Here’s where and with what objective.
From South Korea to the heart of Europe. The commercial and state-owned credit institutions of the South Korean nation have begun to establish their offices in the Old Continent, in the wake of the growing economic and commercial activities linking South Korean businesses and their European partners.
The hottest countries coincide with Poland and Hungary. Not two random nations, but those that have most fueled the flourishing businesses supported by Seoul over the last few years: the production of cars (and batteries) and the export of weapons. The South Korean industries in these sectors are growing, making interesting profits, and, in the wake of the green revolution underway in the West - and the geopolitical risks - are interested in carving out a significant space for action in the European market. Here, therefore, the banks of South Korea are willing to support them.
To better understand what we are talking about, it may be useful to read the South Korean press. The newspaper Korea Times, for example, has turned the spotlight on some industrial giants of the caliber of Hyundai Motor and its subsidiary Kia, LG Energy Solution, Samsung SDI and SK On, all attracted by European opportunities.
Not just automotive and technology. To make Korea’s prospects even brighter we find another previously mentioned aspect to consider: the growth of the defense industries. The same ones have seen huge gains, especially following the outbreak of the war in Ukraine, in the wake of the need of Eastern countries - Poland first and foremost - to strengthen their military systems in an anti-Russian way.
Europe Objective
As regards Defense, for example, only in 2023 did the export of products related to the military sector from South Korea to Poland break through the 9 billion won barrier (approximately 6.6 million dollars). The 14.8% increase compared to the previous year meant that Warsaw became Seoul’s fifth trading partner in terms of surplus, compared to the seventh previously recorded.
It is no coincidence that major South Korean commercial lenders intend to provide combined financing of 10 trillion won to facilitate the country’s arms exports to Poland. How? By opening branches in Europe. The aforementioned agreement, signed last year, will be brokered primarily by the state-run Export-Import Bank of Korea (Eximbank) and the Korea Trade Insurance Corp (K-Sure). Their expansion into the Old Continent should help Korean entities participate in the post-war reconstruction projects of neighboring Ukraine, the overall value of which should be around 750 billion dollars.
At the same time, Hana Bank opened an office in Budapest, the capital of Hungary, on March 21. For what reason in that country? Hungary has the fourth largest battery production plant in the world, with a constant inflow of significant foreign capital linked to rechargeable activities. It is also a destination for South Korean investments for two other reasons: the quality of the local workforce (which, compared to costs, is high) and the geographical position (Hungary borders seven other European countries).
The moves of the South Korean institutions
Hana Bank’s Budapest office brings the number of the bank’s global financial networks to 26. Hana, among other things, also plans to open channels in India and Poland. Furthermore, the institution recently signed a strategic partnership with Credit Agricole Corporate and Investment Bank of France to strengthen cooperation in investment banking, treasury, trade financing, and environmental, social, and corporate governance (ESG criteria).
“The opening of the Budapest office and the partnership with Credit Agricole will strengthen our European network,” said a Hana Financial official.
KB Kookmin Bank, meanwhile, plans to establish a Korea Desk in Poland, supported from 2022 by the partnership with Warsaw-based Bank Pekao. Shinhan Bank opened its office in Poland in 2014, while the state-run Industrial Bank of Korea opened its office in 2023. Woori Bank also has an office in the country.
The chairman of South Korea’s Financial Services Commission (FSC), Kim Joo Yun, has just returned home from a four-day trip to Poland. He was the first major financial regulator to visit the European country. On the occasion, Kim met with his Polish counterpart, promising Seoul’s strong commitment to financial assistance for high-profile cooperation projects including defense, nuclear energy, and infrastructure.
Original article published on Money.it Italy 2024-04-18 07:17:00. Original title: Perché gli istituti di credito sudcoreani puntano sull’Europa
