Overview of Banks in South Korea
As per Moody’s Investment Services, the Korean banking system doesn’t look promising. They have given a negative rank to the Korean banking system. And they have also mentioned that in the next 12-18 months, things are going to deteriorate. The main reason behind that the Moody thinks that the creditworthiness of the banks will get reduced in the near future.
There are a few important reasons for this negative outlook –
- The local consumer sentiment is pretty weak towards the banking system.
- Secondly, the risk of policy risk is also one of the main reasons for Moody’s negative outlook toward the Korean banking system since May 2016.
- Plus, the growth of real GDPReal GDPReal GDP can be described as an inflation-adjusted measure that reflects the value of services and goods produced in a single year by an economy, expressed in the prices of the base year, and is also known as "constant dollar GDP" or "inflation corrected GDP." is also tepid.
Structure of Banks in South Korea
There are around 148 banks that are licensed in South Korea.
These banks can be divided into three broad categories –
- Commercial banks: There are 52 commercial banks that serve local customers in South Korea.
- Specialized banks: There are only 5 specialized banks that provide services to a niche segment of customers.
- Mutual savings banks: There are 91 mutual savings banks in South Korea, the maximum among all.
The banks are regulated and controlled by Financial Supervisory Services (FSS). The Bank of Korea acts as the central bank of the country which issues Korean Won and maintains price stability.
List of Top 10 Banks in South Korea
- KB Kookmin Bank
- Shinhan Bank
- Nonghyup Bank
- Hana Financial Group
- Korea Development Bank
- Woori Bank
- Industrial Bank of Korea
- DGB Financial Group
- Kwangju Bank
- Busan Bank
Here’s a brief description of each of these banks in detail (source: Relbanks) –
#1. KB Kookmin Bank:
This is a subsidiary of KB Financial Group. It is one of the top banks in South Korea. It was founded in the year 1963, around 54 years ago. Its head-quarter is located in Seoul. It has over 1100 branches across the whole country and it services around 30 million customers. It also has 3000 ATMs all over the country. At the end of June 2017, the total assets acquired by the KB Kookmin Bank were KRW 422.249 trillion.
#2. Shinhan Bank:
Shinhan Bank is one of the top banks in South Korea. It was established in the year 1982, around 35 years ago. Around 13,400 employees work here. They have a presence in over 19 countries. Only in South Korea, Shinhan Bank has over 900 offices. Shinhan Bank is the main subsidiary of Shinhan Financial Group. At the end of June 2017, the total assets acquired by Shinhan Bank were KRW 413.911 trillion. Its head-quarter is also located in Seoul.
#3. NongHyup Bank:
NongHyup Bank (NH) is the subsidiary of NongHyup Financial Group. It was established quite recently, in the year 2012, around 5 years ago. NongHyup Financial Group is fully owned by the National Agricultural Cooperative Federation (NACF). NH Bank has around 1200 branches in South Korea. And its focus is on commercial banking services. At the end of June 2017, the total assets acquired by NongHyup Bank were KRW 381.600 trillion. Its head-quarter is also located in Seoul.
#4. Hana Financial Group:
Hana Financial Group was established in the year 1971, around 46 years ago. It is the fourth-largest commercial bank in South Korea. At the end of June 2017, the total assets acquired by this bank were KRW 349.045 trillion. Its head-quarter is also located in Seoul. Around 21,700 employees are employed in the Hana Financial Group. It operates through a whopping 1100 branches in South Korea and it has 150 branches in 24 countries.
#5. Korea Development Bank:
Korean Development Bank (KDB) was established in the year 1954, around 63 years ago. There are around 3500 employees that work in KDB. The head-quarter of KDB is located in Seoul. KDB has a network of 80 domestic branches and it is one of the top banks in terms of total assets acquired. From the last received data, we found out that KDB has acquired around KRW 309.5 trillion of total assets.
#6. Woori Bank:
It is one of the largest banks in terms of total assets acquired. At the end of June 2017, the total assets acquired by this bank were KRW 316.065 trillion. Its head-quarter is also located in Seoul. It is quite an old bank. It was established in the year 1899, around 118 years ago. It serves around 21 million customers and it has a network of 1000 domestic branches. Woori Bank has the largest global network among all Korean banks.
#7. Industrial Bank of Korea:
The main focus of the Industrial Bank of Korea (IBK) is to help develop small and medium-sized enterprises. The Government of South Korea owns a major stake of this bank, around 57.7%. This bank is one of the top banks in South Korea. At the end of June 2017, the total assets acquired by this bank were KRW 257.482 trillion. If we consider small business loans, 81% of these loans are offered by the Industrial Bank of Korea.
#8. DGB Financial Group:
This is one of the largest regional financial institutions in South Korea. It was established recently, in the year 2011, just 6 years ago. Daegu Bank is the flagship company of DGB Financial Group which is also one of the largest regional banks. Its head-quarter is located in Daegu. And it serves most of the customers in the Daegu-Gyeonbuk region. It is one of the significant South Korean holding companies. At the end of June 2017, the total assets acquired by this bank were KRW 56.870 trillion.
#9. Kwangju Bank:
This bank was established in the year 1968, around 49 years ago. The main focus of Kwangju Bank is to provide financial aid to local small and medium-sized business owners. Around 1500 employees work in Kwangju Bank. The head-quarter of this bank is located in Gwangju. At the end of September 2014, the total assets acquired by this bank were KRW 17.432 trillion. It was previously known as the KJB Financial Group.
#10. Busan Bank:
This bank is one of the most popular local top banks in South Korea. It is more of a regional bank than a global bank. However, it provides a wide gamut of financial services to local customers. Financial products and services are limited to personal banking. Busan Bank has a great list of shareholders who are helping it grow gradually – Lotte group, Capital Research & Global Investors, Templeton, National Pension Service, Aberdeen Asset Management Asia, etc.
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