Journal Archive

<Table 1> presents the overall banking delivery channel in Korea. The Korea Federation of Banks (KFB) are entitled to act on behalf of twenty-two full members and forty associated members. The full members incorporate six nationwide commercial banks (NCB), six regional commercial banks (RCB), five specialized banks (SB), two credit guarantee funds, one specialized financial institution, and two internet-primary banks. The branches of forty foreign banks take part in as associate members (for details, see Korea Federation of Banks, 2018b).

<Table 2> documents the banking delivery channel of BNK Busan Bank by regions in Korea. BNK Busan Bank has a total of 184 branches and 78 offices in Korea. As the leading regional bank with headquarter in Busan, BNK Busan Bank operates the most number of branches (138) and offices (75) in Busan, totaling 213 across the regions. BNK Busan Bank maintains two mobile offices (for details, see Korea Federation of Banks, 2018b). BNK Busan Bank is driving “Beyond No. 1 in Korea” initiative.

According to Eun & Resnick (2014, p. 266), there are ten reasons for international banking.

1) Low marginal cost: Managerial and marketing knowledge originated at home can be used abroad with low marginal costs.

2) Knowledge advantage: The foreign bank subsidiary can rely on the parent bank’s knowledge of personnel and credit investigations.

3) Home country information services: Local clients may be able to acquire more complete trade and financial market information from a foreign subsidiary bank operating in their country.

4) Prestige: Very large multinational banks possess high perceived prestige, liquidity, and deposit safety that can be employed to attract customers abroad.

5) Regulation advantage: Multinational banks are often not subject to the same regulations as local banks.

6) Wholesale defensive strategy: Banks go after their multinational clients abroad to prevent the erosion of their clientele to foreign banks.

7) Retail defensive strategy: Multinational banking operations assist a bank avert the erosion of its traveler’s check, tourist, and foreign business markets from foreign bank competition.

8) Transaction costs: By maintaining foreign branches and local currency balances, banks may lessen transaction costs and foreign exchange risk on currency conversion.

9) Growth: Growth prospects in a home country may be restricted by a market largely saturated with the services provided by domestic banks.

10) Risk reduction: Greater stability of earnings is plausible with international diversification.

<Table 3> shows the networks of BNK Financial Group, having eight affiliates and three grandchild companies. As one of the affiliates of BNK Financial Group, BNK Busan Bank has one foreign branch bank and two representative offices in foreign countries. An affiliate bank is one that is only partially held but not controlled by its parent company. A foreign branch bank operates like a local bank, but legally it is a part of the parent bank. Thus, a branch bank is subject to both the banking regulations of its home country and the country in which it operates.

A representative office is a small service facility run by parent bank personnel. The parent bank may commence a representative office in a country in which it has many multinational corporation (MNC) clients or at least an important client.

To conduct a preliminary survey on overseas expansion of BNK Busan Bank, we obtained data from 300 employees affiliated with BNK Busan Bank. The sample data was collected during February 1-25, 2017. The survey consists of two parts: the first part with 13 questions on international expansion by a regional bank, and the second part with 5 questions on socio-demographics of subjects. Although the questionnaire is not included in this paper due to space constraint, but it can be available on request.

<Table 4> reports the sample characteristics classified by gender, age, headquarters or branches, location of offices and marriage. In gender classification, 157 employees are male, representing 52.3% of sample. In terms of age, the workers are divided by four groups, namely, 20-29, 30-39, 40-49 and over 50. The weights for the groups are 15.0%, 34.0%, 35.0%, and 16.0%, respectively. Among the 300 respondents, 66 work at the headquarter (22.0%) and the remaining 234 at the branches (78%). Based on the location of offices, 247 work in Busan (82.3%), 21 in Kyongnam and Ulsan (7.0%), 30 in seoul (10%), and 2 in other locations (0.7%). Finally, in terms of marriage status, 82 employees are not-married (27.3%), and the majority 218 are married (72.7%).

<Table 5> reveals the survey result on international expansion perceived by the BNK Busan Bank workers. They were asked to choose one answer among five choices, namely, ‘extremely unnecessary,’ ‘unnecessary,’ ‘indifferent,’ ‘necessary,’ and ‘extremely necessary.’ Nearly four in five employees overwhelmingly supported for the international expansion of BNK Busan Bank. As much as 257 workers answered that the overseas expansion is necessary or extremely necessary. Only 15 employees replied that the international expansion is extremely unnecessary or unnecessary.

<Table 6> discloses the survey result on the strategic motivation of foreign expansion by BNK Busan Bank employees. They were asked to choose one answer among six choices, namely, ‘profit seeking,’ ‘superior service,’ ‘manager’s passion,’ ‘tax benefit,’ ‘scale of economy,’ and ‘others.’ Almost half of them (147 out of 300) answered that profit seeking is the most important motivation of international expansion. Among the 147, more male employees respond that profit seeking is the most important strategic motivation than female workers (97:50). Scale of economy is the second most important motivation (88 out of 300), followed by superior service (35 out of 300), manager’s passion (20 out of 300), others (9 out of 300), and tax benefit (1 out of 300).