ΆΓ  [IMF] KEB Leader in Cross Border Money Market

 KoreaTimes 2000.09.25

Korea Exchange Bank, a specialized foreign exchange bank in the Korea's banking sector, has been fully dedicating to the Korean economy's development and its customers.

Established in 1967 as Korea's only bank specializing foreign exchange and trade finance, Korea Exchange has maintained the largest global network with 49 overseas offices in 22 countries.

On the back of its highly experienced foreign exchange dealings and highly trained staffs, Korea Exchange has become a market leader among competitors in cross border money market, money exchange, trade finance and foreign exchange deal.

However, the bank's banking services are not limited to these areas. Rather, it focuses mainly on foreign direct investment and inter-bank clearing services.

Korea Exchange Bank's past good performance was highlighted by the strategic alliance with Commerzbank. Since 1998, Commerzbank has invested $580 million and held 31.6 percent of KEB's capital after the government with 32.1 percent.

Commerzbank strengthened KEB's competitive advantage with direct engagement into the management. Commerzbank has nominated two executive directors and two non-executive directors to KEB's board of directors.

Korea Exchange enhanced mortgage origination and servicing, project finance, credit management and direct marketing with Commerzbank's advanced management skills in these fields.

A cross-border money transfer is the strongest advantage KEB has taken since its foundation. As of the end of last year, Korea Exchange has a market share of 25.4 percent while the second competitor bank holds just 7.6 percent.

This year the volume of KEB has been increased slightly.

Korea Exchange has been also the leading bank in money exchange market with 29.7 percent share. As of June this year, the share by the bank grew to 33.4 percent. In this market as well as cross-border money transfer market, KEB has never lost the leading position since it was established.

In the area of trade finance, the bank has been taking the top position. In export market, Korea Exchange has enjoyed 20.3 percent market share. As of June this year, the bank still leads the market with 21.4 percent market share, while the other peer banks are 19.9 and 13.1 percent, respectively.

In import market, Korea Exchange Bank has dominated market with 21 percent share while the second largest bank has been 16.3 percent in 1999.

In addition, KEB is the market leader in the won-dollar exchange deal with 29 percent market share.

Among others, Korea Exchange is the only commercial bank which is offering inter-bank payment & clearing services for foreign currencies to the financial institutions in Korea.

Especially, the bank also is the market leader in foreign direct investment inducement with 21 percent market share last year. But this year, the market share increased to 32.6 percent.

Korea Exchange Bank's international corporate division, the best-practiced global marketing team, is specialized in serving foreign corporate customers.

Comprised of 11 staffs, the division makes full commitment to handle notification of foreign direct investment, general affairs and marketing.

From providing initial investment consultation services to offering comprehensive banking services under the most competitive terms, the division offers foreign corporate customers a true ``one stop service'' by coordinating all activities with Korea Exchange's branches and subsidiaries.

In detail, the division provides consultation services on various Korean regulations _ foreign capital inducement act, domestic corporate laws _ with the help of Korea Exchange Bank's in- house legal counsels and accounts.

Closely coordinated with extensive domestic and international branches and subsidiaries including KEB Credit Service, Saloman Smith Barney KEB Securities and KEB Futures, the bank provides the most comprehensive financial services available in the market.

Further, concerning foreign invested enterprises in Korea, Korea Exchange and Commerzbank perfectly satisfy clients' needs with the competitive financial products and services.

Based on these wide ranging services and specialized banking services, Korea Exchange Bank's performances have greatly improved.

First half's income in 2000 reached 45.1 billion won, up 22 percent from 37.1 billion won from the same period last year. And the number of companies in transaction with Korea Exchange Bank in the first half of the year increased by 51 percent to 1,681 from the same period last year.

However, the deposits at the bank in the first half of the year declined by 2.1 percent to 1.88 trillion won from a year earlier.

The reason was mainly attributable to the fact that Korea Exchange Bank has got the low credit rating,and in turn some international corporate changed their main books to other foreign banks to their parent companies' instructions.

However, there are also some negative external factors aggravating the inducement competition between competitors, resulting in reduced transaction profit.

Foreign banks have been KEB's main competitors but competition is escalating following the entrance of second-tier banks in a market of fund operation.

In addition, inferiority in corporate management system, which has been emerged as one of the core systematic products for corporate customers that enables automation of overall banking procedures, has contributed partly to deteriorating market competition.

However, in spite of restricted information and other difficulties, Korea Exchange Bank has aggressively conducted direct marketing through information acquired from the press and managed to induce new 38 excellent foreign invested enterprises and revitalize 45 existing business lines.

And with the advanced banking services and marketing skills from Commerzbank, there are drastic changes in both working practices and staff's experiences.

Corporate marketing division and staff aggressively launched marketing to foreign invested companies with the help of Commerzbank.

With the amassed skills for banking services and highly experienced staff, Korea Exchange Bank will prove its position as a market leader.