Korean banks target rich Chinese amid profitability woes
Published : Jun 4, 2014 - 09:42
Updated : Jun 4, 2014 - 09:42
South Korean lenders are reaching out to wealthy Chinese customers as they seek new growth engines amid ultra-low interest rates and lackluster demand on their home turf.
Local banks have been providing Chinese-language banking services to mostly blue-collar laborers in southwest Seoul.
However, recent moves highlight their efforts to tap affluent Chinese who have already emerged as a major force in the retail sector.
Woori Bank, the flagship unit of South Korea's biggest banking group, said Tuesday it has opened a section solely dedicated to Chinese customers at one of its branches in Jeju.
More than 1.8 million Chinese visited the volcanic holiday island in 2013 for tours and business, compared with 1.1 million the previous year, according to the Jeju provincial government.
Bank officials explained that the new service, provided in Chinese, offers consulting services on investment and wealth management to upscale customers flocking from the world's second-largest economy.
"We are not using old-school marketing tactics like cheap transaction fees for currency exchange. We are trying to appeal to high-end customers who are willing to invest and do business on the island," Park Hyun-dong, a manager at the bank's foreign exchange business division, said by phone.
The new service at the Jeju branch is the latest in the lender's drive to attract Chinese clients. In mid-March, the bank launched a credit card that offers a five-year multiple-entry visa to those who have deposited over 50 million won ($48,842).
Visitors from China usually apply for single-entry visas that have to be acquired for each trip, a hassle often cited by frequent travelers.
A bank official said the credit card has received roughly 800 subscriptions in the 11 weeks following its launch, projecting the number to grow with its new branch service in Jeju.
Hana Bank, the key unit of South Korea's No. 3 banking group, Hana Financial, has also joined the move to lure Chinese customers in Jeju.
In September, the bank opened a branch in Nohyeong-dong, a Jeju town with the nickname "Gangnam of Jeju," coined after the posh Seoul district that rose to stardom with Psy's "Gangnam Style."
Hana Bank chief Kim Jong-jun stressed the importance of the branch during its opening ceremony, remarking "Jeju has seen a continuous rise in foreign tourists and investments by foreigners are also gaining ground."
Officials at other local lenders acknowledged the growing importance of Jeju as a location for their growth.
The recent moves come as South Korean banks struggle to identify new sources of profit amid tough market circumstances.
The central bank has held the benchmark seven-day repo rate steady for the 13th straight month, while domestic demand has taken a turn for the worse with the sinking of the ferry Sewol.
Lenders also saw their profits from transaction fees tumble since 2011 as the government pressured them to slash the fees to better serve customers. (Yonhap)
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