An increasing number of South Korean financial companies are entering the Southeast Asian market as financial demands are going up in the region based on its rapid economic growth and infrastructure expansion. Experts point out that South Korean financial companies can survive in the market, where competition is growing, only when they specialize themselves in promising fields such as fintech-based digital finance.
According to industry sources, Shinhan Financial Group recently participated in a preliminary bidding in Indonesia via Shinhan Bank and Shinhan Card in order to acquire shares of PT BFI Finance Indonesia. Late last year, Shinhan Financial Group took over the retail banking arm of ANZ Bank in Vietnam. In January this year, Shinhan Card acquired all of the shares of Prudential PVFC, which is Prudential pic’s retail banking company located in Vietnam.
Industrial Bank of Korea (IBK), in the meantime, recently signed a conditional stock purchase agreement in Indonesia with DIP, the largest shareholder in Bank Agris, to acquire DIP’s 82.59% shares in the bank. IBK is planning to open IBK Indonesia in the second half of this year after acquiring another local bank sooner or later.
“These days, more and more South Korean companies are heading to Southeast Asian countries to make use of lower labor costs and highly skilled labor forces and South Korean banks are paying increasing attention to the countries for higher rates of return,” said an expert, adding, “The banks are focusing on local bank acquisition, rather than overseas branch establishment, as the most effective and profitable way of entering the Southeast Asian market with the governments in the region making it more difficult for foreign banks to obtain a business license there.”