"Its Only the Beginning"

Woori Bank CEO calls for creative strategies, undaunted spirit, although bank assets broke 200 tln won level

Woori Bank is proud of its achievements last year amid various difficulties that faced the banking industry such as a credit crunch caused by the subprime loan crisis in the United States and the outflow of funds from banks into the stock market.
Woori Bank President Park Hae-choon said the new year is no different from last year in the environment surrounding the banking industry with many changes expected to occur. Therefore, the bank should not be intimidated by the changes and should be run with creative strategies and an undaunted spirit to fight for its share of the financial market.
Woori Bank will have to stem the outflow of funds to the stock market and try to expand its earnings through tight management. In order to do that, the bank will divide the market by customers: credit card, deposit products linked to derivative products, long-term deposit funds from public organizations such as municipal governments, provincial governments and security deposits handled by the courts. The bank will also expand its personal loan business by offering more loans to such credit worthy individuals as professionals, directors of corporations and others so that its loans, both on credit and mortgage, will be more diversified. The aim of the strategy is to develop the areas neglected by the bank in order to expand its business territory.
With regard to non-interest earnings, the bank will focus on the expansion of investment banking, overseas operations, the expansion of its credit card operation, the development of derivative financial products and an expansion of its share of the retirement fund market.
The bank will put a special emphasis on the IB business and overseas expansion with the number of overseas branches growing from 39 at present to 200 by 2010 under the bank's "Global 10200"strategy. The bank will not only deal with Korean overseas residents and businesses, but also with wealthy local residents in the area of private banking and credit card operations to strengthen its local operations in China.
The bank has set up a special task force to deal with private investments and M&As and has dispatched global resident managers to countries including Australia, Kazakhstan and Thailand.
This year, the bank will provide training for personnel in the sectors of investment banking and trading and risk management for the trading operation, as that area will be accelerated.
Woori will also boost its risk management levels to be ready for the enforcement of the Basel II framework and keep a close watch on liquidity movements. It will also strengthen the operation of its branches and personnel productivity in an effort to raise the level of management effectiveness.
The corporate loan market is likely to be restricted compared to last year with the enforcement of Basel II, a new framework for the Bank for International Settlements.
The Korea Development Bank, in its report on the "Corporate Financial Market in 2007 and the Prospects for 2008,"said corporate loans this year will be reduced by 8.7 percent from last year, totaling 174.2 trillion won compared to 190.8 trillion won last year. The funds provided by banks and other financial institutions to corporations had increased for the last three consecutive years, the report said.
The KDB said the enforcement of Basel II will reduce the risk for corporate and personal loans, but boost the risk for loans provided to SMEs, as the banks prefer to provide only safe loans.
The report projected corporate loans this year would total 658.5 trillion won, up 15.7 percent, down from an increase of 23.4 percent in the preceding year. The Kookmin Bank Research Institute also projected that banks will reduce the standby loan accounts (minus loans) for corporations to tighten their risk management.
In order to soften the loan conditions for SMEs, the Financial Supervisory Service has decided to consider loans to SMEs of less than 1 billion won as personal credit loans to expand the loans provided to SMEs.
The banks are expected to wrestle with the problem of money flowing into the stock market from bank deposits, which is feared to boost interest rates, now that banks will not have enough funds to meet the demand for loans. nw

Pres. Park Hae-choon of Woori Bank.