South Korean banks are poised to bolster their presence in Poland, anticipating a surge in demand for financial assistance as the two nations deepen their strategic alliances and economic ties.
On Tuesday, KB Kookmin Bank, one of the country's leading lenders, announced a partnership with Poland's Bank Pekao to establish a "Korea Desk."
According to Kookmin Bank, the signing ceremony for the deal was held on Monday at Pekao's Warsaw headquarters. The event was attended by Pekao's Vice President Jerzy Kwiecinski, overseeing the management board, corporate banking, and the markets and investment banking division, alongside Kookmin Bank's Vice President Kang Nam-che, who heads the global business division.
As Poland's second-largest bank, with expertise in investment banking, corporate banking, and trade finance, Pekao's collaboration with the Korean lender marks a significant milestone in their partnership, which commenced with a deal signed in October 2022.
Building upon their ongoing collaboration, the two banks have opted to establish a Korea desk within Pekao to enhance their relationship.
"We have laid the groundwork for entering the Eastern European market with the establishment of the Korea Desk," stated a Kookmin Bank official. "Based on our strong commitment to cooperation, we will actively deliver competitive financial services and support Korean companies and partners operating in Poland."
The official further indicated that the firm plans to inaugurate the Korea desk within the first half of the year.
Another prominent South Korean lender, Hana Bank, is considering the establishment of a branch in Poland.
Last Thursday, Hana Bank inaugurated a new office in Budapest, Hungary, marking its first foray into the Eastern European region. The bank stated that this expansion is part of its broader strategy to enhance its global presence, with plans for further expansion in Poland and India.
The state-run Export-Import Bank of Korea, or Eximbank Korea, is also preparing to venture into the Polish market this year. With a plan to open its Poland office before the year concludes, the bank is currently in the process of assembling the team to be deployed for this endeavor, an Eximbank official revealed.
Other banks which have already established footing in the country are also seeking expansion. Presently, the Industrial Bank of Korea, Shinhan Bank and Woori Bank are operating offices in Poland. Woori Bank, which currently runs an office in Katowice, intends to elevate its status to a branch, while IBK aims to transition its Wroclaw office into a local corporate entity.
The local lenders' rush for Poland comes in light of the deepening economic collaboration between the two nations, particularly in strategic sectors like arms and energy.
Backed by the increase in arms exports, Poland was the source of South Korea’s fifth-biggest trade surplus last year, with the combined exports to Poland reaching $9 billion. Notably, exports in arms and aircraft totaled $1.7 billion -- approximately 1.5 trillion won -- marking a significant 184 percent increase from the previous year.
South Korea's investment in Poland has likewise experienced a sharp upswing in recent years, reaching a cumulative total of $6 billion as of 2023.
Amid these developments, Financial Services Commission Chair Kim Joo-hyun recently traveled to Poland to meet with the head of the country's financial supervisory authority. This marked the first official meeting between the top financial regulators of the two nations, and the first business trip by an FSC chair to Poland.
In a statement preceding the meeting, the FSC reiterated its strong commitment to enhancing financial support for large-scale cooperation projects between the two countries, and to seek cooperation from the Polish government to facilitate the operations of Korean banks in the local market.
Top executives from Korea's private and policy lenders accompanied Kim on his four-day trip, starting Sunday. They held discussions with local financial regulators and Korean enterprises operating in Poland. Around 370 Korean companies, including Hanwha Aerospace, Korea Aerospace Industries and LG Energy Solutions, have operations in Poland.
During Kim's visit, the Korea Federation of Banks signed an MOU with the Polish banking society to strengthen collaboration between the two nations' banking sectors.
Amidst the conflict between Ukraine and Russia, South Korea foresees a rise in its weapons exports. The heightened military tensions have prompted countries like Poland to bolster their defense capabilities. Poland finalized a 17 trillion won ($12.7 billion) arms deal with South Korean companies in 2022 and is expected to pursue a secondary agreement worth 30 trillion won soon.
