[Banks, to Eastern Europe] ① To Poland, to Hungary... Banks Expanding Their Footsteps

Expansion of Four Major Banks into Poland
Shinhan, Woori, and Hana Banks Open Offices in Budapest, Hungary

Banks actively expanding their overseas sales networks are broadening their reach to Eastern Europe, which has become a "land of opportunity." In addition to Shinhan, Hana, Woori, and Industrial Bank of Korea (IBK) already operating offices there, KB Kookmin Bank is also planning to establish a local office, marking the beginning of full-scale support for local entrants and partner companies.

According to the financial sector on the 25th, KB Kookmin Bank will soon set up a Korea Desk in Poland, Eastern Europe. The Korea Desk functions as a local office. Kookmin Bank has long been preparing for its entry into Poland. In 2022, it signed a business agreement with Pekao Bank. Pekao Bank, established in 1929 as a national policy bank, was acquired in 2017 by PZU, the largest financial group in Eastern Europe, and the Polish National Development Fund (PFR). It is regarded as one of Poland's top corporate finance banks.

Kookmin Bank collaborates with Pekao Bank in areas such as corporate loans, mutual customer introductions and recommendations, support for Korean companies operating in Poland and local partner companies, and various trade finance products including guarantees and letters of credit. With the establishment of the Korea Desk, Kookmin Bank's entry into Poland and the broader Eastern European region is expected to accelerate.

Expanding into Eastern Europe is not limited to Kookmin Bank. On the 21st, Hana Bank opened an office in Budapest, Hungary. Hungary is the world's fourth-largest battery production base, and recently, a large influx of greenfield foreign capital (direct land acquisition for factory and business site establishment) has been centered on the secondary battery sector. Particularly, Hungary's geographical advantage of bordering seven European countries including Austria, and its ability to secure a high level of labor relative to labor costs, have led major domestic companies to expand proactive investments by establishing secondary battery production plants centered in Hungary.

According to Hana Bank, the Budapest office will discover and connect business opportunities tailored to the financial needs of Korean companies operating locally. Hwang Hyo-gu, head of Hana Bank's Global Group, said, "With the opening of the Budapest office, we have further strengthened our network in the Eastern European region," adding, "We will do our best as a financial communication channel for the rapidly increasing Korean companies operating in Hungary." Hana Bank is also planning to open a new channel in Poland.

Shinhan Bank opened a local office in Wrocław, southwestern Poland, in 2014, and Woori Bank established one in Katowice, southwestern Poland, in 2017. IBK also opened a local office in Wrocław in May last year. Both cities are major industrial hubs in Poland where several Korean companies have established operations.

The financial authorities are also showing considerable interest. Kim Ju-hyun, chairman of the Financial Services Commission, visited Poland with officials from the five major commercial banks and IBK on a 3-night, 4-day trip starting the day before, encouraging Korean financial firms to expand their presence and local business in Poland. Kim is the first chairman of the Financial Services Commission to visit Poland, indicating growing attention to the Eastern European financial market.

On the day of the visit, Chairman Kim met with the head of the Polish Financial Supervision Authority. This meeting marked the first high-level talks between the financial authorities of the two countries. Kim sought active cooperation from the Polish financial authorities regarding licensing applications from domestic banks such as IBK and Woori Bank. He also proposed the swift conclusion of a supervisory cooperation memorandum of understanding (MOU) currently under review by both sides within the first half of this year to support smooth local business operations of Korean financial companies.

The reason commercial banks are focusing on Poland, Hungary, and other Eastern European countries is due to expanding economic exchanges with Korea. Given Eastern Europe's role as a production base for Western Europe, finished vehicle manufacturers like Hyundai Motor and Kia, along with their suppliers, and secondary battery companies such as LG Energy Solution, Samsung SDI, and SK On, operate factories in Poland, Hungary, and the Czech Republic.

Recently, defense industry exports have also increased, expanding related trade volumes. According to the Korea International Trade Association, Korea's exports to Poland last year rose 14.8% year-on-year to $9.02 billion. As a result, Poland climbed two ranks to fifth place among Korea's top trade surplus countries.

Especially after the Russia-Ukraine war, the geopolitical value of the region has increased, and defense-related exports are on the rise. Following a first defense export contract worth 17 trillion won, a second contract worth 30 trillion won is planned. Since the Korea Export-Import Bank alone is insufficient, the five major commercial banks are also pushing for loans totaling 10 trillion won in Poland to support exports.

Industry insiders say there is also great anticipation for post-war reconstruction projects. The Ukrainian government estimated in 2022 that post-war reconstruction would require about $750 billion (approximately 990 trillion won). Eastern Europe is expected to serve as a forward base for Ukraine's post-war reconstruction efforts.

A representative from a commercial bank said, "It is difficult to guarantee whether offices in places like Poland will be converted into corporations in the future," but added, "Since large-scale Korean companies have entered the market and Eastern Europe, geographically adjacent after the Russia-Ukraine war, will serve as a forward base for post-war reconstruction projects, the growth potential is sufficient."