rue to his reputation as a leading proponent of overseas advancement by Korean financial institutions, Chairman Lee Pal-seung of the Woori Financial Group has led the group in its take over of a partial stake in the Saudara Bank in Indonesia to become the second largest shareholder.

The group could have been a majority shareholder of the Indonesian bank, but chose not to as the bank would have had to contend with many local regulations had a foreign investor become a majority shareholder, classifying the new entity as a foreign bank.

Industry sources, however said Woori would have no trouble co-managing the bank with the local majority shareholder, not just as a strategic partner.

The takeover is in line with Chairman Lee’s call for globalization of Korean financial institutions, which he calls the core of the survival strategy and also a backbone of the dominant position in the global competition for Korean banks. 

Lee’s call for globalization of Korean financial institutions shows the degree of the retarded state of their overseas operations, comparable to “frogs in a well’” according to a Korean proverb.

The Banker, a British financial magazine, named Woori Bank a top Korean bank in overseas operations, but ranked it the 72nd in global rankings of all banks.

The financial group’s overseas operations take up only 5 percent of its total assets, far smaller than those of major global banks including HSBC, showing that the group has a long way to go yet to be a global concern.

Lee declared the group’s new vision to be a global financial group ranked the 10th at least by 2015 in Asia, and 50th in the world under the group’s Global 10500 Strategy. In the name, 10 means that the group will record a profit rate of 10 percent with 10 percent of its total assets overseas by 2015, while 500 means that it will build a global financial network by linking 500 foreign banks by means including M&As and boost its overseas assets to 50 billion won also by 2015.

Lee believes that M&As are the only way to expand the group’s size and targets can only be found overseas. Last year, he left on an overseas trip with a number of the group’s leading executives and the itinerary included a stop in Spain to visit Santander Bank. While in talks with leading executives of the Spanish bank, they got the idea for its M&As overseas. The result is the takeover of a stake in Saudara Bank.

The group has also been pursuing strategic tie-ups and localization to expand its overseas financial network. The strategic tie-ups are being pushed with foreign banks that have great potential for growth, but local regulations are in the way for M&As.

Last year, the group concluded a strategic tie up with BBVA of Spain and the Transportation Bank of China, the 5th largest bank in China.

The group has also been pushing the localization of its overseas operations. Woori Bank localized its branch in China in November 2007, for the first time for a Korean bank operating in China, taking advantage of the changed local banking regulations for foreign banks, increasing its banking network 15 now.

In January 2008, Woori Bank opened a wholly-owned local subsidiary in Moscow and followed it with another one in St. Petersburg, becoming the only bank in Korea to have two local subsidiaries in Russia.

Woori Bank has 18 banking network through six states in the United States including in Los Angeles and New York. The group led by Woori Bank have been pushing for the setting up of local subsidiaries in Vietnam and Malaysia and have opened a representative office in Sao Paulo, Brazil, next month.

The group has also been training its officers and staff to run overseas branches and local subsidiaries including those hired locally at its overseas business units.