Poland, whose relations with Korea have been elevated to a “Comprehensive Strategic Partnership,” is emerging as a key base for major Korean financial companies. These institutions plan to support the expansion of K-defense into the European market with Poland as a hub and to participate in reconstruction projects following the end of the Russia-Ukraine war.

According to the financial sector on the 14th, financial institutions including SGI Seoul Guarantee, KB Kookmin, Shinhan, Hana, Woori, and IBK Industrial Bank of Korea have been establishing offices, branches, and subsidiaries in Poland from last year through early this year.

SGI Seoul Guarantee, whose major shareholder is the Korea Deposit Insurance Corporation, this month became the first insurer to open an office in Poland. It plans to explore local market-entry strategies such as converting to a branch through local market research and by strengthening networks with financial institutions in Poland and neighboring countries.

IBK Industrial Bank of Korea received authorization to operate a Warsaw subsidiary from the Polish Financial Supervision Authority in November last year. It is the first time a Korean bank has obtained full authorization there. Once IBK obtains its business license, it will be able to conduct lending, deposit-taking, trade finance, and foreign exchange operations at the same level as local banks. Hana Bank opened a branch in Wroclaw in September last year, and Woori Bank opened a branch in Warsaw in March of the same year. KB Kookmin Bank and Shinhan Bank had already established offices (desks) in Poland earlier on.

Banks that have entered Poland are pursuing a strategy of expanding their business in line with the extension of loans and guarantees by state-run financial institutions. In 2022, the Korean government signed a framework defense contract worth USD 44.2 billion (about KRW 65.3 trillion) with the Polish government, under which the Export-Import Bank of Korea and the Korea Trade Insurance Corporation are extending loans and guarantees to the Polish government amounting to USD 6.3 billion and USD 8.9 billion, respectively.

Commercial banks are growing their business by purchasing loan claims from foreign financial institutions that have lent to Korean defense companies. In effect, they receive principal and interest payments in place of the foreign banks that lent to the Korean companies. This approach both supports loans to Korean companies and enables commercial banks to expand their overseas operations in a stable manner.

Korean financial institutions plan to use financial support for Poland-related K-defense as a springboard to grow their previously stagnant European operations. A commercial bank official said, “Aside from the Southeast Asian market, we have not been achieving notable results in overseas business, but starting with our Polish base, we plan to expand into reconstruction projects that will follow the end of the war between Ukraine and Russia.”

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