Korean banks flock to Poland, Korean Inc.’s new manufacturing hub

South Korean banks are in a race to advance into Poland to support Korean companies rushing to build factories in the new offshore manufacturing hub in Eastern Europe for their new growth engines, ranging from batteries to defense systems.

According to the Korean banking industry on Sunday, Kookmin Bank, the commercial banking unit of KB Financial Group Inc., the top Korean financial holding company by assets, has embarked on the process of setting up the so-called Korea Desk in Poland.

The new office will play the role of a liaison office that takes care of businesses of Korean companies in the Eastern European country, emerging as a global manufacturing center near many countries in Eastern and Central Europe such as the Czech Republic, Slovakia, Hungary, Germany and Ukraine.

Poland is considered the next global rechargeable battery production base after China, attracting many Korean companies such as LG Energy Solution Ltd., SK IE Technology Co., POSCO Holdings Inc. and SKC Ltd. to build their battery-related manufacturing facilities.

Korea’s top two automakers Hyundai Motor Co. and Kia Corp., as well as electronics giant LG Electronics Inc. also have their local operations in the Eastern European country.

Korean banks’ aggressive venture into Poland is also driven by Korean defense companies’ successful exports of their defense systems, including FA-50 lightweight combat aircraft and K9 self-propelled howitzers, worth 1.5 trillion won ($1.1 billion) last year.

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Kookmin Bank has been seeking to advance into Eastern Europe via a partnership with a local bank, and its new Polish office will focus on corporate lending to Korean firms in Poland and the region, according to an official from the bank.

Woori Bank, the commercial lender under Woori Financial Group Inc., has also decided to promote its existing liaison office in Poland to a local branch office this year.

Since 2017, the Korean bank has been operating a one-man office in Katowice, the capital city of the Silesian Voivodeship in southern Poland.

“We plan to offer prompt local financing services due to grow in line with the increasing Korean weapon exports with the new branch office,” said an unnamed official from Woori Bank.

Korea’s state-run Industrial Bank of Korea is also in the middle of incorporating its existing local office in Poland, with a plan to apply to the Polish authorities for permission to establish a new entity this year.

Its current Polish office is located in Wrocław, where LG Energy Solution, POSCO and LS Cable & System Ltd. operate their manufacturing facilities.

LG Energy Solution Wrocław is Europe's largest producer of lithium-ion batteries for the automotive industry, according to the Korean battery major.

The bank expects competition among Korean lenders to offer Korean companies corporate loans and other financing services in the region to intensify amid growing demand.

Write to Jae-Won Park at wonderful@hankyung.com

Sookyung Seo edited this article.