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South Korean banks are pushing to make inroads into the Myanmarese market in a bid to find their new sources of income amid a saturated local market, officials said Monday.
Korea's No. 3 lender Shinhan Bank is seeking to open an office in Myanmar as early as next year, targeting to set up a unit if rules banning operations of foreign banks are eased, according to officials.
The state-run Industrial Bank of Korea said it plans to apply for permission to open an office there within this year. Currently, the Myanmarese financial authorities only allow foreign banks to create offices.
Shinhan's main
rivals Woori Bank and Hana Bank have already begun to tap the Myanmarese market
by setting up offices in October.
Woori Bank said it opened an office
in the city of Yangon in late October with an aim to enlarge it into a branch or
a wholly-owned unit in early 2014. Hana Bank also set up an office last month
and has clinched a tentative deal to boost its strategic alliance with Myanmar's
lender Ayeyarwady Bank.
The local banks' move came as doors for
foreign investments are likely to open further in Myanmar, as the United States
and the European Union are easing economic sanctions on the country.
Ending years of military dictatorship, the Southeast Asian country is carrying
out democratic and economic reforms following an election in 2011.
South Korean banks' push also stemmed from their falling profits in a saturated
local market. Combined earnings by 18 Korean banks amounted to 7.5 trillion won
(US$6.9 billion) in the first nine months of this year, down 39 percent from a
year earlier, according to the financial watchdog.
Their
fourth-quarter earnings may be weaker, as the central bank's rate cuts and the
economic slowdown are highly likely to squeeze their profit margin, analysts
say.