As the nation’s low interest rate has contracted their profits, Korean banks are targeting rich people in Southeast Asia and China as new income sources.

Hana Bank and the Industrial Bank of Korea are the frontrunners in the trend.

Hana Bank launched its first Indonesian private banking center in Jakarta on May 2, in addition to its private banking centers in China and Hong Kong.

The Jakarta center has one Korean manager with 10 years’ experience in private banking at home and is a certified financial planner. The rest of the employees are Indonesians, the bank said.

Hana said its overseas private banking service was a long-term operation, and overseas private centers are seeing continued growth.

The bank purchased the Indonesian local bank Bintang Manunggal in December 2007, and now holds a 61 percent stake in it.

The purchase of the Indonesian bank was initially meant to provide services to Korean employees of overseas branches, but now the bank is expanding its clientele to private banking customers. The bank expects that the private banking service will attract a larger number of Indonesian customers. No other Korean banks hold centers exclusively for private banking, instead preferring to dispatch private banking employees to overseas branches.

“Well-known foreign banks already run private banking services there, but Korean banks have been reluctant about it so far,” a Hana Bank spokesperson said.

About possible hostilities facing foreign capital, he said, “We take over the branch of a local bank, whereas other banks operate as overseas branches (of the Korean bank).”

The Industrial Bank of Korea currently runs private banking services in Tianjin, mainland China, as well.

Instead of launching an exclusive center for private banking, the IBK runs a private banking unit that is subordinate to IBK’s Chinese branches.

IBK was careful about expansion of the service. “Our private banking service in Tianjin is more like a test operation,” an IBK spokesperson said. The IBK dispatched a Korean private banker with six years of experience in the sector, who rotates through the bank’s branches in the region.

“Our highest goal for the future is to have Chinese local customers deposit and invest money in our bank. But we still lack the base-work,” an IBK spokesperson said.

KB Kookmin Bank, which opened its branch in Beijing last December, said it would lure Chinese corporations to boost its operation’s competitiveness until 2017. Additionally, the financial firm said it will target wealthy clients in China by selling private banking services until 2018.

By Chung Joo-won (joowonc@heraldcorp.com)