President Kim Do-jin, 4th R, cuts the tape to open the Vladivostok branch of the Industrial Bank of Korea in a ceremony held on Nov. 20 signaling the bank’s return to Russia for the first time in six years, along with other IBK officials joined by local Russian officials. (Photo: IBK)

Industrial Bank of Korea opened a rep. office in Vladivostok, a city in the Russian Far East, that has been known as a bridgehead for the Northern Economy of South Korea. The IBK move signals the first step to rebuild its financial network in Russia in six years, the bank announced on Nov. 21.

The bank applied for a license to the Russian financial authorities in August and IBK was successful in October. The bank closed its Moscow rep. office in 2012 in the wake of the global financial crisis.

President Kim Do-jin, who led the bank’s bid to set up an outlet in the Russian Far Eastern hub, participated in the opening ceremony for the new office on Nov. 20. The bank rented a space at Hotel Lotte Vladivostok, where a number of Korean business firms also have offices, and the bank will have a rep. assisted by a local employee. The hotel opened for business in July.

IBK will monitor the latest trends on the Russian financial market through the Vladivostok rep. office and also other info on Russia in general, and the economy in particular, to help Korean firms or individuals who want to advance into Russia for businesses.

The Vladivostok office will also play a key role in the bank’s future operational plans in Russia, including setting up a local subsidiary and taking over local financial firms thru M&As.

Vladivostok will be in the center of attention for Korean business firms with plans to extend their operations to Europe as the city is the terminal for the trans-Siberian Railroad in the Russian Far East and connects with Saint Petersburg, the second-largest city in Russia and a gateway to Europe.

The government will use the Russian city as a launch point for its new Northern Economic Strategy, which is designed to help the Korean firms advance to Europe via North Korea and Russia when the Inter-Korean economic project gets in full swing.

Under the strategy, both Korea and Russia discussed the 9 Bridge Strategy in a meeting held last year by the government officials of the two countries which included such key points as the supply of gas through pipelines through North Korea, railroads and harbors.

The reopening of an office in Russia brings the total number of banking outlets overseas for IBK to 28 in 12 countries, and the bank wants to boost them to 165 outlets in 20 countries by 2025.

IBK specializes in supporting small- and medium-sized enterprises.

The bank's net interest margin, a key measure of profitability, reached 1.95 percent in the third quarter, inching down 0.01 percentage point from a quarter earlier.

The lender, which specializes in supporting small and medium enterprises (SMEs), saw its outstanding loans to smaller firms reach 151.1 trillion won as of end-September, up 6.1 percent from the end of last year. Its SME loans dominated the market with a leading 22.6 percent share.

Industrial Bank of Korea engages in the provision of banking services. It operates through the following business divisions: Corporate Banking and Retail Banking division. The Corporate Banking division provides financial services to small-and-medium-enterprise companies, loans, consulting services, job creation, import and export financing services. The Retail Banking division offers private banking and retail loans.

In addition, it also offers products and services such as deposit, credit card, smart banking, telephone banking, internet banking, foreign exchange, exchange rate and foreign investment. The company was founded on Aug. 1, 1961 and is headquartered in Seoul, South Korea.