The Industrial Bank of Korea (IBK), long the dominator in the nation’s financial market for SMEs, has decided to redraw its strategy. It announced plans to rearrange its branches that serve mostly SMEs located in the industrial complexes around Seoul.
A major aim of the move is to expand the number of branches inside those complexes and divide up its banking service areas in detail to provide more intimate services to the SME customers in and around the industrial complexes around the capital, IBK sources said recently.
The bank has been considering structural adjustments in line with changes in the business environment as soon as the plan is ready by the fall this year.
The IBK sources said the bank has been eyeing the launch of a unit to take charge of matters related to fintech and the establishment of an Internet bank, which are two new banking areas that have emerged lately. It also wants tostrengthen its operations related to SME customers.
The rearrangement of its banking outlets in the industrial complexes, which has been known as IBK’s backyard, will also be a major point in the shakeup of its operational structure with the Shihwa Industrial Complex in Gyeonggi Province, the Incheon Namdong Industrial Complex, the Banwol Industrial Complex and other industrial complexes around the capital area being the key industrial complexes in the bank’s move.
IBK operates 29 branches and other outlets in those industrial complexes, which is more than its rival banks, including Woori, Shinhan and Kookmin Banks.
But IBK cannot sit idle just because it has the largest number of outlets in those industrial complexes. Its rival banks have increased their outlets and are catching up with IBK.
IBK plans to break up a number of its large branches into smaller ones, especially ones located inside the Banwol, Namdong, and Shiwha industrial complexes. For example, the branch in Banwol Industrial Complex — the largest among its branches in those complexes — will be broken into two or three smaller branches, as its assets total 1.7 trillion won, more than those of three or four ordinary branches combined. The idea is to provide closer, more intimate financial services to those SMEs inside the industrial complexes, officials of the bank said.
Most of SME loans are real estate-related, taking up 23 percent of all SME loans. IBK’s move in breaking up its branches comes at a time when its rival banks are in the process of setting up branches in those industrial complexes, focusing on low-interest rates on loans. The banks charge from 3 to 5 percent on loans provided to SMEs, while they charge 2.5 percent on household loans.
In the first quarter, IBK’s SME loans amounted to 2.6 trillion won, while other banks such as Kookmin and Woori banks dished out 2.4 trillion won in loans to SMEs, double from what they were in the preceding year for both banks. Hana Bank’s SME loans came to 1.4 trillion won, which is a huge increase year-on-year.
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