HSBC Holdings PLC has given up on buying a South Korean bank because it is too expensive, and now plans to greatly expand its own branch network in the Asian nation, an HSBC executive said.
"We are working out a business plan pretty rapidly, and I would expect to see a significant expansion in the second half of the year," Paul Thurston, general manager for HSBC's personal financial services business in the Asia-Pacific region, said in an interview.
Thurston said London-based HSBC would increase its branches in South Korea -- still a small part of the global bank's operations.
"We are going to significantly increase the number of staff that we put on," he added.
"I would expect to see us growing our branch numbers maybe three or four times in the course of the next twelve months, which will bring us to at least 30 branches," he said.
HSBC made a pretax profit of US$88 million last year from South Korea, up from US$69 million in 2003 -- a tiny share of the US$1.88 billion in pretax profits from its Asian operations outside of Hong Kong.
Rival Standard Chartered PLC, though much smaller than HSBC globally, gained 404 branches in South Korea with its recent US$3.3 billion purchase of Korea First Bank.
Still, HSBC executives said last week they now think acquiring a bank in South Korea is just too expensive, and are focusing on slower, organic growth instead.
But South Koreans are a particularly tech-savvy lot -- 70 percent of homes have high-speed broadband Internet access -- and Thurston said HSBC hopes their comfort with online banking will make a big branch network less necessary.
"In this day and age, lots more people have different ways of doing business with the bank. I'm not convinced myself that bricks and mortar is the only way. It's an important channel, but it's not the only channel," Thurston said.