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Full Scale Expansion into US Financial Market
KOREAN OFFENSIVE
Full Scale Expansion into US Financial Market
  • By matthew
  • August 19, 2013, 05:31
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Hana / HSBC joint headquarters building in Euljiro, Seoul.
Hana / HSBC joint headquarters building in Euljiro, Seoul.

 

The major Korean financial service institutions are pushing into the American market by acquiring local financial firms in the US and supporting the exports of small and medium-sized enterprises (SMEs) in Korea. The move is part of a strategy for attracting new customers and securing new growth engines through their overseas expansion in the field of financial services.

On August 14 (local time), Hana Financial Group (HFG) got approval of the takeover for the BNB Financial Services Corporation, which is the holding company of Broadway National Bank (BNB), as well as BNB itself, from the Board of Governors of the Federal Reserve System (FRB) in the US, according to sources in the financial industry on August 16. HFG is scheduled to manage the BNB Corporation starting next month, after ending its investment by the end of this month.

Korea's third-largest financial services group signed a stock purchase agreement with the US-based financial firm in July 2012 and applied for FRB's approval a month later. In May 2013, HFG also got approval of the incorporation of BNB Financial Services and BNB as its subsidiary and sub-subsidiary respectively from the Financial Services Commission (FSC) in Korea.

Through this merger, HFG is planning to lay the groundwork for business expansion in the North American market, which encompasses the US and Canada.

Hana Financial Group reported that thanks to BNB's incorporation as a sub-subsidiary, it has established a system that provides comprehensive financial services in the US, including business financial services through its New York branch and trade finance services through local subsidiaries of Korea Exchange Bank (KEB) in New York and Lost Angeles. 

Broadway National Bank, regional partner of Jilin Bank and 34 members of the Asia Financial Cooperation Association in North America, will play a role as a financial partner between continents. BNB is also expected to act as an intermediary between North American markets and Southeast Asian ones, including 39 local networks in Indonesia and those in Vietnam and Myanmar.

In early August, KEB reached a business agreement with the Korea Federation of Small and Medium Business (Kbiz) and Korea Trade Insurance Corporation (K-sure) to support Korean SMEs so that Korean companies can land a spot in the retail big leagues in North America.

Korea Exchange Bank also helps Korean SMEs secure liquidity that export their products to large retail outlets in the region that Kbiz recommended, by buying export bonds in advance (discounts on the purchases of export bonds). Through this help, it is planning to assist Korean exporters in maintaining their business and in continually increasing sales by collecting export proceeds early and removing the possibility of losses arising from the failure of importers to pay invoices when due.

The National Agricultural Cooperative Federation (NACF) recently opened its first overseas branch in New York. As its first transaction, Korean business in the region opened foreign-currency deposit accounts. 

NACF started its business in New York on August 15. The NY branch is engaged in depository business and overall banking activities such as providing an overseas remittance service; financing import and export; lending in the form of business loans; and payment guarantee, financing, and managing loans. 

An official in the financial industry said, "The US is an important market even though it has not been in the spotlight compared to the emerging markets of Southeast Asia," adding, "Korean financial companies are exploring growth momentum abroad beyond the already-saturated domestic financial market."