The South Korean lender announced Oct. 26 that it received final approval from the Philippine’s financial authority to take over a 51 percent stake in Wealth Development Bank for 30 billion won ($26 million). With the stake purchase, Woori Bank will become the first foreign bank to acquire a local bank in the Philippines since the country opened its financial market to the world in 2014.
The lender will operate Wealth Development Bank jointly with its parent company Vicsal Development Corp., the fourth largest retailer in the Philippines, operating big department stores and supermarkets across the country.
In cooperation with Vicsal, Woori Bank aims to expand Wealth Development Bank’s network by three to four per year to achieve its goal of securing 1.3 million credit card subscribers by 2020 in the country. It also plans to help the bank become one of the top 10 in the country by turning it into a commercial bank.
Following this acquisition, the number of Woori Bank’s overseas networks will increase to 234 in 25 countries, the ninth largest in Asia, and much more than its local rivals, such as Shinhan Bank with 147 networks in 20 countries; KEB Hana Bank with 135 networks in 24 countries; and KB Kookmin Bank with 18 networks in 11 countries.
The bank aims to increase the number of networks in Southeast Asia to more than 410 to become the seventh largest bank in Asia by the number of networks through additional acquisitions by the end of this year. It also plans to establish a German subsidiary and a branch in Poland to accelerate its efforts to tap deeper into the European Union and enter Mexico in which many Korean companies are operating their businesses.
It aims to expand the share of its net profit made overseas from 12 percent as of the third quarter this year to 30 percent by 2020. The bank plans to further expand its overseas banking network by setting up outlets in the EU, including in Germany and Poland, and in Latin America by opening an outlet in Mexico, soon.
Woori Bank has become Korea's first bank to make a financial transaction with an Islamic bank, paving the way for local banks to earn interest gains from such deals with banks in Islamic states.
"As they expect higher interest gains from deals with banks in Islamic countries compared to deals here, Korean banks have reasons to make transactions with their Islamic counterparts as part of their income diversification strategy," a bank official said.
On Jan. 11, Woori Bank extended $10 million in loans to the Qatar Islamic Bank through its Bahrain branch, the first of its kind for the state-owned bank, it said in a statement. "The financial deal with Qatar Islamic Bank is aimed at securing new income sources overseas and cushioning the impact of market volatility resulting from a series of U.S. rate hikes expected throughout this year on the domestic market," the official said.
Woori Bank is planning to expand financial deals with Islamic banks and then start a business in the long-term, extending its connections in Islamic countries such as Bangladesh, Dubai, Malaysia and Indonesia, he said.
Financial transactions with Islamic banks have been overlooked by Korean banks due to complicated transaction terms and ensuing tax issues. But this time, the Qatar Islamic Bank has acted as a local agent in Qatar for Woori Bank, it said.
Faced with low growth and low margins, Woori Bank has stepped up efforts to expand overseas as it seeks to find new areas of growth, away from the saturated domestic market.
A counter of Wealth Development Bank in Manila, the Philippines, of which Woori Bank has become a majority stakeholder, taking over 51 pct of its stake on Oct. 26.(Photos: Woori Bank)
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