South Korea’s major banks are rushing to Singapore as the city-state is emerging as a new financial hub in Southeast Asia, replacing the traditional stronghold of Hong Kong.
According to the financial industry on Friday, Hana Financial Group Inc. recently obtained preliminary approval from Singapore’s financial authorities to establish an asset management company in the city-state.
KB Kookmin Bank, a unit of KB Financial Group Inc., also received a preliminary permit in May to operate a banking business in Singapore.
The two Korean banking giants are expected to obtain the final approval in the third quarter and begin operations by the end of this year, according to industry officials.
The move comes as Singapore is rapidly emerging as the financial hub in Asia in lieu of Hong Kong, with nearly 40% of Southeast Asian fintech companies based there.
The preliminary permit KB Kookmin Bank received is a wholesale banking license, which allows the top Korean lender to engage in all banking services except for retail banking. Business areas include corporate banking, investment banking and brokerage services.
Once it receives the final green light, KB Kookmin Bank plans to establish its Asian loan review center in Singapore, covering the entire Southeast Asian market, including Hong Kong.
Singapore is emerging as a new financial hub in Southeast Asia. FIRST OVERSEAS AMC FOR HANA
For Hana Financial Group, the envisioned asset management firm in Singapore will be its first such company in an overseas market.
The group has said its entry into Singapore's asset management market with high growth potential will help it secure a key Asian market to springboard its global expansion.
"The envisioned asset management company will cooperate with other subsidiaries to diversify revenue streams and pave the way to move into other advanced markets," said Hana Financial Group Chairman Kim Jung-tai.
Hana Financial, which has Hana Bank as its flagship financial firm, is said to be considering taking over a local asset management company in Singapore once it acquires the final permit for its services in the country.
DGB Financial Group, a banking holding company based in the city of Daegu, is also considering launching its global financial headquarters in Singapore.
Woori Bank has already set up its Asian corporate financing review center in the city-state for business throughout Southeast Asia.
“Singapore is certain to be the financial hub for India, the Middle East, Malaysia and Indonesia. There’s hardly any time difference between major cities in the region. That’s a strong plus for financial firms operating there,” said a banking industry official.
MORE ROOM FOR GROWTH IN SOUTHEAST ASIA
The Southeast Asian market is also thought to have more room for growth than South Korea's saturated banking market.
Korea’s four major banks – Shinhan, Kookmin, Hana and Woori – have local branches in Asian countries such as India, Indonesia, Myanmar and Cambodia for banking services, earning about half of their overseas profits in the Asian region.
KB Kookmin Bank posted a combined 80.8 billion won ($71.3 million) in net profit from Cambodia, Indonesia and Myanmar. Shinhan Bank earned 140 billion won from operations in Vietnam, Cambodia and Indonesia.
Industry officials said some financial companies have moved away from Hong Kong since its pro-democracy movement in recent years.
“Nevertheless, Hong Kong has three times more business channels than Singapore, particularly in dealings with China. It’s still easier to do financial transactions with China in Hong Kong,” said a local banking official.
Write to Jin-Woo Park and Nan-Sae Bin at jwp@hankyung.com In-Soo Nam edited this article.
