Korea Development Bank is taking a big step towards the global financial arena under the flag of “Pioneer Bank of Asia”
Korea Development Bank (KDB) places a priority on regions where the nation’s top expertise in corporate banking can create maximum effect; countries that have already been used as business base camps by many Korean firms, or those that desperately need financing for economic development, or have potential for national strategic overseas businesses like the construction of nuclear plants and development of natural resources.
In particular, KDB is paying attention to China and some Southeast Asian countries. These countries share a similar cultural background with Korea, allowing KDB to easily approach them with its financial know-how accumulated during Korea’s economic development, and thus eventually gain a big edge over the competition. KDB’s long-term strategy is to take a leap forward to become a global top-tier financial institution by using its strong position in the Asian market as a stepping stone.
As part of this strategy, KDB agreed to acquire RBS Uzbekistan in December 2010, completing the deal in November 2011. KDB plans to merge RBS Uzbekistan with UzKDB by 2012, thus creating the largest foreign bank in Central Asia and making it an outpost for financial exports in the region.
KDB is also expanding networks in China, which has emerged as a G-2 nation along with the US. The bank plans to foster branches and offices in China as its main cash cows. The bank is currently preparing to open a Shenyang branch in the region of China’s three northeastern provinces (Liaoning Province, Jilin Province, Heilongjiang Province) where an increasing number of Korean firms are conducting business. Following this, it plans to open branches in Quingdao and Chengdu. This network aims to take advantage of the Chinese financial market which currently displays an annual 15% growth rate.
In regards to Southeast Asia, which boasts affluent growth potential and recently became the second most preferred market by Korean businesses after China, KDB is in the process of building a so-called “Commercial Investment Bank (CIB) Belt.” Having operated an outpost branch in Singapore, the bank opened an office in Hanoi, Vietnam in April 2012 and is now looking for an opportunity to expand its network in Indonesia, Thailand and Myanmar, which need to develop natural resources and gain financing for economic development.
In East Europe, Central Asia, and the Middle East and North Africa (the so-called MENA region), KDB aims to first foster an outpost branch in the regional hub, before seeking an advancement strategy in cooperation with local banks, which can put it at less risk than in the case of solo debouch. Especially in African countries, which are in the early stages of economic development, KDB plans to establish a development bank and expand financial exports by handing over its special know-how through a knowledge sharing program (KSP) and its so-called “Saemaul Movement,” a government-proposed rural development campaign designed to help countries escape poverty.
Special know-how in corporate and international banking services and the ability to create financial instruments have become KDB’s pivotal assets. KDB is also in a favorable position compared to other local banks in Korea because it is the only bank available for financial investment overseas. Many Korean companies have joined forces with KDB, while many Korean banks have followed the path KDB set. KDB has now turned its attention to the overseas market and embarked on the financial export frontline regarding emerging economies in Asia and Africa, using its accumulated know-how to contribute to the advancement of the Korean economy, therefore going beyond simply exploring a foreign market. One good example of KDB exporting its financial know-how and systems is the signing of a management contract with the Development Bank of Mongolia in August 2011.
KDB’s starting line is a few steps ahead of its competitors in that it has the capability to provide total CIB solutions. KDB has built up total corporate banking service systems for financing arrangement, M&A, consulting, trade finance, risk management, and others. Furthermore, it can provide total CIB solutions that match customer needs through collaborative efforts with its affiliates.