April 26, 2024

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South Korea’s state-run Industrial Bank of Korea officially launched its Indonesian unit on Sept. 19, the bank said on Sept. 20.

“Based on the capabilities we have built on for the last 58 years, we will assist Indonesia’s small and medium businesses and economic development,” Kim Do-jin, the bank’s chairman, said during a commemorative speech.

The Indonesian unit has set a goal to become No. 1 SME-specialized bank. The bank aims to achieve 25 percent of its overseas profit and have 15 percent of its overseas assets in Indonesia. 

IBK Indonesia bank kicked off 30 branches but plans to expand to a network of 55 branches by 2023.

Newly launched PT IBK Indonesia is a result of a merger of two local lenders PT Mitraniaga and PT Bank Agris.

In Feb. 2018, IBK acquired 87.34 percent stake in Bank Agris in its first overseas acquisition to make a foray into the Southeast Asian country with a population of 265 million. In April 2018, the Korean bank obtained a 71.7 percent stake in another Jakarta-based bank Bank Mitraniaga.

The Korean bank got approval for the merger of the two companies last month from the Financial Services Authority of Indonesia.

To build up the proposed IBK Asian Financial Belt, the bank’s global growth strategy focusing on Southeast Asia, it is upgrading offices in Vietnam to corporate entities while mulling whether to set up its business in Myanmar.

Betting on the potential of the country with the world’s fourth-largest population, Korea’s major lenders such as Woori Bank, Shinhan Bank and KEB Hana Bank entered the market in recent years.

On the part of Indonesia, the financial authorities have been trying to trim the number of locally owned banks there, which is more than 100. As part of such efforts, it allows foreign investors to buy a stake in a bank of up to 40 percent if the investor purchases a stake in one bank. But those that invest in two or more banks are exempt from such restrictions.

By Park Ga-young (gypark@heraldcorp.com)