BBVA bucks trend by setting up Seoul branchThe official launch of Spain’s second-largest bank in Seoul is drawing attention in the financial market.
The establishment of a branch office of BBVA (Banco Bilbao Vizcaya Argentaria) comes as Korean companies continue to aggressively expand in the global market since the late-2008 global crisis.
“BBVA has been following the Korean economy for a long time,” Francisco Gonzalez, chairman and CEO of BBVA, said at a press conference on Wednesday.
“With its high growth potential, Korea is a very prominent country in Asia and a key market for BBVA’s expansion plan in the region,” he added.
BBVA Research projects that the domestic economy will expand by 3.8 percent in 2012, a slightly more positive outlook than the government’s readjusted outlook of 3.7 percent, which it made last week.
The Spanish bank’s chairman noted the success of local companies in recent years.
“We think Korean companies have been successful not only here in Korea but also globally, and for that reason we thought, ‘Why not invest here?’?” Gonzalez said.
Since 2006, BBVA has had a representative office in Seoul. With its new branch, it hopes to expand its customer base and services to corporations and institutional Korean investors.
The Spanish bank’s arrival comes at a time when many of the foreign banks in the Korean market have been struggling, especially those that entered since the financial crisis in the late 1990s.
HSBC has recently been trying to sell its branches, while SC First Bank, the local unit of British banking group Standard Chartered, has been laying off its employees and encouraging voluntary early retirement after suffering the worst labor strike recorded in the financial sector here in the past few months.
BBVA said it will move to expand not only in Korea but also more broadly in Asia. Its chairman said that although the company’s net profit ratio from Spain may shrink from its current 20 percent, profits in the 32 countries where it has branch offices will grow.
Gonzalez made it clear that while the bank is interested in investing in the local financial market, it has no plan of buying local banks or expanding into retail finance here.
“Our business is mainly retail, and we base our business model on getting closer to our customers and quickly adapt to the rapidly changing technologies, such as the use of smart devices like the iPad, to meet our customers needs,” said Gonzalez.
“However, since we have just started and have yet to learn about how the Korean market works, we plan on focusing on our wholesale businesses rather than on retail,” Gonzalez added, noting that the bank will monitor the market for the next three years before deciding whether to seek out new opportunities.
“In time, we may consider expanding into retail, but for now, we have not even considered it. We will first focus on our first office.”
By Lee Ho-jeong [ojlee82@joongang,co.kr]
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