Competition among banks to attract foreign direct investment (FDI) is intensifying in South Korea. Despite recent signs of a slowdown in key domestic economic indicators, FDI is still at an all-time high in the country, making it an attractive prospect for financial institutions, with FDI transactions also bringing in lucrative commission revenue and attracting foreign exchange trading customers.

According to sources in the financial sector on Monday, Woori Bank snagged the top position in the industry with FDI inflows of $2.73 billion in the first half of this year. Hana Bank, with 690 transactions, also holds a dominant position in terms of the number of transactions.

Korean banks have recently been stepping up their FDI operations. Woori Bank, for instance, established a dedicated organization for foreign exchange capital transactions in July, aiming to enhance its marketing efforts in this area. The bank restructured its organization to cover all capital transactions, including FDI and the number of employees handling FDI operations increased from seven in one team to 10 in three teams.

Currently, Woori Bank is involved in projects such as financing deals for the relocation and expansion of domestic production facilities of a global chemical company headquartered in the United States and the relocation of a secondary battery material production facility for a Chinese joint venture corporation.

Hana Bank, which has had a dedicated FDI organization even when it was known as the Korea Exchange Bank, has the highest number of FDI arrivals. Hana Bank offers consultations in English, Chinese, and Japanese, with a team of 13 employees handling FDI operations.

Hana Bank successfully secured investments from the United States, China, and Qatar for a domestic secondary battery company in the third quarter of 2023, in a significant deal worth $800 million.

The reason why Korean banks are stepping up their FDI operations is that FDI is one of the few indicators that continue to perform well in the current economic environment marked by global economic stagnation. With ongoing geopolitical tensions and fragmentation in the global economy, FDI continues to achieve “historic highs.”

According to the Ministry of Trade, Industry, and Energy, South Korea recorded $17.09 billion in FDI for the first half of 2023, a 54.2 percent increase from the same period a year ago based on declaration, and a 6.3 percent increase to $7.75 billion in terms of arrivals.

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