South Korea’s Busan Bank is speeding up its expansion of overseas business by opening its second Chinese branch in Nanjing on June 29, one of the Chinese hubs of Korean companies where foreign investment continues to rise.
Busan Bank, which opened its first Chinese branch in Qingdao in December 2012, expects that with the opening of the Nanjing branch it will be able to create a more efficient business network in China.
“We plan to make the Qingdao and Nanjing branches play as business centers that will manage northern and southern parts of China business respectively,” a Busan Bank official said.
As of the end of 2017, a total of 230 Korean companies have invested in Nanjing, including 15 large companies and 80 companies that have entered the market with them. Nanjing accounts for 24.5% of Korea’s exports to China and 21.7% of its investments.
Busan Bank also plans to convert its existing offices in Mumbai, India, and Hanoi, Vietnam, into branches as part of its overseas business expansion strategy.
Foreign banks trying to advance into another country generally should operate an office for at least two years there before they are given the conditions to apply for a banking license. As Busan Bank established offices in Mumbai and Hanoi in May 2016 and February 2017 respectively, it is qualified to apply for the license in the two regions.
Busan Bank, however, is not expected to switch its office at Yangon, Myanmar, to a branch. Instead, it plans to do business there by acquiring a non-bank financial institution (NBFI). This is an institution that offers loans and financial products but does not have a full banking license or is not supervised by a national or international banking regulatory agency.
Last year the Myanmar government decided to selectively release licenses for foreign financial firms to set up a NBFI. Following this decision, Shinhan Card Co Ltd and KB Kookmin Card and some other financing companies are considering entering the market.
“We are thinking of acquiring an NBFI or making equity investments in other financial institutions, though nothing has yet been finally decided,” said the Busan Bank official. (Reporting by Jangjun Lee)