Rolling into China

Woori Bank to set up 30 bank branches in key cities in China by 2010 and also to provide 1 tln won in special loans to SMEs

Woori Bank will set up 30 branches in China by 2010 mainly to secure yuan deposits from Chinese customers, the bank announced recently. The bank plans to set up branches in the cities where Korean businesses are located including Beijing and Shanghai and will launch its private banking service aimed at rich native citizens and Korean businesspeople engaged in business in China. Woori Bank also plans to provide 1 trillion won in loans to innovative-type SMEs on special discounted interest rates, down by 0.2 percent from ordinary rates, along with business consultations. The bank will also give counseling to women CEOs on marketing and networking, especially on tax, legal and real estate matters. The bank will also run educational facilities such as coaching school and charming school for employees of firms managed by women CEOs. Woori Bank President Park Hae-choon announced the bank's strategies at a lunch he hosted at a downtown Seoul hotel on May 18 where some 200 CEOs of SMES were invited.
Woori Bank, with the registration of its local subsidiary in China this year, aims to put itself in an advantageous position in the retail banking sector in the neighboring country, based on its strategy for avoiding various local regulations for the operation of its wholly-owned local subsidiary.
Kim Dae-shik, chairman of the China Woori Bank establishment committee, said by the end of this year, the local subsidiary will be opened in Beijing by the end of this year and its operation will be limited to securing Chinese currency deposits first. He said the committee got the license from the Chinese monetary authorities and by the end of this year, it expects get the official approval from the Chinese government.
The committee plans to open 2 or 3 branches in Shanghai, along with retail banking units in a number of major cities including Beijing, Qingdao, Tianjin and Nanjin. Kim said the bank will hire local branch managers for its two branches in Shanghai to localize their operations.
Kim, who has always been designed to head the bank's Chinese subsidiary, said the Woori operation will aim at catering to Korean firms and businessmen in China, along with rich Chinese people to secure the Chinese yuan deposits. Each Woori Bank branch in China would have a nicely decorated private banking center as plush as those in Korea. It will provide various information on asset management and give mortgage loans to attract customers.
Woori Bank officials feel that they would be able to do banking business as well as any well-known foreign banks such as HSBC and Citibank if it would offer high profit financial products, although its name is not as popular as those foreign banks.
Woori Bank's Chinese subsidiary should lower the loan-deposit ration below 75 percent by 2011, according to the law passed by the Chinese Cabinet Office at the end of last year, which will hinder foreign banks operations in China.
The average loan-deposit ratios of the three Woori Bank branches in China stand at 870 percent, considered problematic, but it will be whittled down to 790 percent this year, 169 percent next year and to 91 percent in 2009 and 74 percent in 2010. In order to bring that about, the bank would have to lower the growth of loans to below 6 percent annually and try to increase deposits substantially in the coming years.
Woori officials said the bank would not have as many as branch networks that Chinese banks have, but they will try to use the electronic banking facilities to the fullest and offer high-profit financial products to entice wealthy local customers. In the meantime, Park Hae-choon, who recently became president of Woori Bank, said he will strengthen the marketing of its credit card business, while focusing on risk management. He said the bank increased its assets by 46 trillion won last year, a stupendous annual growth and now is the time to focus on minimizing non-performing assets. He will set up the risk management headquarters and also run policies that will be very selective about the overseas operation of the bank with intensive analyses of profitability.
He will also concentrate on the credit card business with strong marketing programs. He said the credit card will have a new design under his effort to make it a credit card good enough to represent the credit card industry.
He also said the bank will not have vice president to make the decision-making process simple, just like the Woori Financial Holding Co. doing away with the position of vice chairman as agreed with Chairman Park. He said he will be at the forefront of an effort to turning around the atmosphere at the bank a little confused by the change at the top. nw

President Park Hae-choon of Woori Bank.

Woori Bank President & CEO Park Hae-choon, center, delivers a speech at the SME CEO Luncheon hosted by the bank May 18 to pledge its support.On the right is Song Ki-jin, Vice President in charge of the SME Financial Headquarters.