Published on Tuesday, 27 November 2012 15:45
The Korea Herald/ANN
Major commercial banks are poised to actively make inroads into Myanmar as the country is starting to implement an open-door policy toward international activity.
Following Woori Bank and Hana Bank, which opened liaison offices in the Southeast Asian country last month, Shinhan Bank plans to join the movement as early as the first half of next year.
The state-run Industrial Bank of Korea is also preparing to tap the new market in a bid to overcome the saturated market conditions at home.
After building relations with the Myanmar government through liaison offices, the Korean banks are expected to open branches or local subsidiaries when the ban on non-Myanmar banks’ business activities is lifted.
A Shinhan Bank spokesman said one issue is whether to form a joint venture with a local bank or to establish a wholly owned corporation.
Woori Bank is expected to register its Yangon office as either a branch or a local subsidiary by early 2014 and expand its network of branches in the country.
Hana Bank has signed a strategic partnership with Ayeyarwady Bank, Myanmar’s third-largest bank in terms of total asset.
Korea’s major commercial banks have been expanding their business networks in Asia’s emerging markets over the past few years on the back of enhanced diplomatic ties.
In October, Korea and Myanmar agreed to bolster business and diplomatic ties as Seoul looks to firm up its footing in the Southeast Asian country following sweeping democratic and economic reforms.
They agreed to push for an investment protection pact and boost cooperation on trade, energy, resources and infrastructure.
The two countries established diplomatic relations in 1975. The relationship soured in 1983 when a terrorist bombing in Yangon by North Korean agents killed 17 Seoul officials accompanying then-President Chun Doo-hwan. Myanmar severed ties with Pyongyang after the incident.
Korean banks’ targets include countries in central and southern Asia as well as those in Southeast Asia, China and Japan.
“Aside from markets like China, Vietnam and Singapore, the banking industry began actively tapping Kazakhstan, India and Bangladesh,” a local banker said.
But he stressed that banks will still put priority on making inroads into large cities in China and Southeast countries.
“With the 2008-2009 global financial crisis fading, local banks have been rushing abroad to get the upper hand in emerging markets,” a banking analyst said.
He said their aggressive expansion overseas was attributable to limited profitability in the saturated local banking industry.
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