President Ji Sung-kyu of KEB Hana Bank.

KEB Hana Bank took a 15 percent stake in BIDV, the state-owned and largest commercial bank in Vietnam, for over 1 trillion won, showing its bona-fide strategy to boost its overseas operation.

The bank announced on July 22 its move to acquire the stake in the largest commercial bank in Vietnam for 1.249 trillion won, which is the biggest-ever investment in the S.E. Asian country by a Korean financial firm so far and also the largest overseas investment by Hana Financial Group.

BIDV will issue some 603.3 million shares to KEB Hana in exchange for cash. The plan has gained approval of the board of directors. The transaction, slated to be completed Dec. 31, will make KEB Hana the second-largest stakeholder of BIDV. The State Bank of Vietnam currently owns 95.3 percent of BIDV, whose stock ownership will get lowered to 81 percent after the transaction.

Founded in 1957, BIVD has affiliates in such key financial areas as securities, leasing, insurance, and asset management, among others, totaling 14 affiliates.

Its total assets amounted to 66.3 trillion won and annual net profit 380.9 billion won as of the end of 2018. The bank, in addition, has a number of joint ventures with global financial operators.

The Vietnamese bank has most of its operation, around 70 percent, in the lending business, mostly to the business corporations, taking advantage of its vast number of financial outlets in Vietnam, including 1,000 branches and rep offices. The bank operates 58,000 ATMs around the country.

BIDV has also been inclined to set up cooperative relations with KEB Hana down the road in such areas as retail and digital banking, and also with the bank’s affiliates in a number of key areas of the financial industry.

Officials of KEB Hana Bank said the Vietnamese bank is an excellent target as far as overseas investment is concerned earning stable dividends as well as growth in investments, and KEB Hana will gradually diversify its investment in Vietnam with the stake investment in BIDV as the beachhead.

The bank has been operating its businesses in Vietnam centered around Hanoi and Ho Chi Minh City, dealing mostly with Korean firms there.

Korean financial firms in Vietnam have been quickly expanding their operational territories from the manufacturing industry with the low wages its big advantage to the consumer market, deciding that the S.E. Asian country has been quickly turning into a consumer market.

Shinhan Financial Group, among others, has decided that Vietnam would be its biggest growth market overseas, with the S.E. Asian country turning out the biggest profit for the financial group last year.

The group’s operational profit in Vietnam came to 124.4 billion won in 2018, taking up 26 percent of its total overseas profit of 475.5 billion won last year.

The expansion of KEB Hana Bank’s operation in Vietnam would be a big momentum boost for Hana Financial Group’s overseas expansion, with the group running the Global Loyalty Network to spur its Fintech operation around the world, which is represented by its overseas payment service called “Hana Money,” around the world.

The payment service, using fintech around the world was kicked off in Taiwan first in April and then will be moved to Vietnam and Japan later.

Vietnam is very important to the group’s global operation as the country is being used as a testbed for all kinds of financial services overseas before commercializing it in other countries.