SEOUL: Chinese banks are growing rapidly in South Korea. The Seoul branches of China’s five major banks are attracting more customers to save RMB. Chinese banks now rank second in asset weight of foreign banks in South Korea, after the United States. CCTV reporter U-Jean Jung went to the Bank of China’s Seoul office to find out why.
Yang Geum-ja is withdrawing yuan notes for her son to spend in China. Yang says saving in the Chinese currency has given her better returns. “The exchange rate (between the yuan and the won) has surged and (depositing in the yuan) has higher interest rates.” Yang Geum-ja said. Yang is just one of the many South Koreans who are choosing Chinese banks, to avoid low interest rates in the country.
“According to the Bank of Korea, yuan-denominated deposits by residents in South Korea has surged dramatically. The yuan-denominated deposits in 2011 was 80 million dollars, but now it has grown to almost 20 billion dollars.”
Bank of China was the first Chinese bank to open a branch in Seoul 22 years ago. But Huang De, the Korea Executive Officer, says, he’s seen explosive growth just in the last couple of years.
“Our asset size was only 1.7 billion dollars at the end of 2010, but it grew to 18 billion dollars in four years. Just between these few short years, this kind of investment has increased more than 10-fold.” Huang said.
To meet rising demand and growth, Bank of China is currently looking to purchase a building in Seoul’s financial centre. Mansoo Jee of the Korea Institute of Finance says turning South Korea into an offshore yuan hub is crucial for China’s master plan to make its currency a global player.
“Until now, China has relied heavily on Hong Kong to internationalise the yuan. But South Korea is a very attractive country as it can help expand the usage of the yuan outside of China in a balanced manner in both trade and financial transactions.” Mansoo Jee said.
