South Korea’s Woori Bank will inject $100 million in its Indonesian subsidiary to bolster its capital base and groom it as one of top five lenders in the Southeast Asian country.

According to multiple sources from the financial industry on Wednesday, PT Bank Woori Saudara received approval from the Indonesian financial authority on its plan to increase capital by $100 million. The lender will finalize the plan in July after receiving approval from shareholders.

The capital increase will be promoted by offering shares to shareholders in which Woori Bank that owns 74 percent of stock ownership will buy back all of the forfeited shares.

An unnamed Woori Bank official said that the lender has plans to enhance local retail operations including those of pensions, credit loans, and high-grade corporate loans from the second half of this year after the capital increase. The move comes as part of efforts to further promote growth potential of its business in Indonesia that has the fourth largest population in the world and make it the gateway to branch out other Southeast Asian markets, the official added.

The capital will also be invested in promoting new businesses including local credit card operations.

Financial industry sources note that Woori Bank’s plan to increase capital is aimed at boosting domestic operations after its Indonesian entity merged with Saudara Bank in 2014. Woori Bank acquired Indonesia’s Bank Himpunan Saudara as part of a merger that was approved by the financial authority in December 2013.

Bank Woori Saudara is currently Indonesia’s 42nd largest lender among 115 commercial banks based on total asset. It manages 144 network branches as of May. After the capital increase, Bank Woori Saudara plans to expand network to 152 branches by the end of this year. The bank raised $21 million in net profit as of end of last year, up 50 percent from $14 million at the time of the merger.

Woori Bank has been aggressively expanding its business in Indonesia through its local subsidiary. It has signed a business agreement with Hanwha Life Insurance to provide so-called bancassurance or insurance policies sold at banks to financial consumers from this month on top of expanding private bank operations. The lender also plans to offer its mobile bank service WiBee Bank from July.

By Park Joon-hyung

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