2nd Bank Competes In Settlements

Kookmin Bank said Monday it has begun to provide settlement services for foreign currency transactions between financial services firms in Korea.

Those services in Korea had been monopolized by Korea Exchange Bank for about 30 years. Kookmin Bank says it expects fierce competition between the two banks as it enters the business.

Such services are not assessed fees; instead, a settlement bank makes its profit on the spread between the prices it pays for buying and selling foreign currencies for its customers. It also has the use of funds on deposit from other banks.

The bank said it will pay no interest on most customer-bank deposits there; it will pay interest, however, on deposits of over $500,000.

Kookmin Bank plans to deal in 28 foreign currencies, including the U.S. dollar and the Japanese yen.

The universe of its customers is 22 local commercial banks, 39 foreign bank branches operating in Korea and four Korean merchant banks.

Kookmin, the largest commercial bank in Korea, said it will market the new service aggressively.

In total, daily foreign currency financial settlements in Korea involve a flow of some $2 billion per day.

by Moon So-young