South Korean commercial and state-run banks are looking at opportunities to forge deeper and closer ties with Poland, including establishing banking relationships to facilitate letter of credit (L/C) flows to support trade between the two countries.

The opportunities have been created by a rapid growth of integrated economic activities between Korean and Polish businesses, in particular in the electric vehicle battery and defence industries.

Kookmin and Pekao

Korea's Kookmin Bank says it plans to establish an office in Poland, a move that would build on its 2022 partnership with Warsaw-headquartered Bank Pekao.

The two banks already cooperate in the provision of L/C, bank guarantee and other trade finance offerings.

Banking and corporate links

Shinhan Bank opened its office in Poland in 2014 while state-run Industrial Bank of Korea opened its office in 2023. Woori Bank also has an office in the country.

The banks are mirroring moves by Korean businesses into Poland's key industrial sectors. Last year Hanwha Aerospace established a European entity in Warsaw. In 2022, POSCO Holdings inaugurated the Poland Legnica Sourcing Centre, a secondary battery recycling facility Poland.

Korea and EBRD

Korean interest in Europe is underlined by the Seoul's long time involvement with the European Bank of Reconstruction and Development (EBRD). Korea is a founding member of the EBRD and an important donor to the bank's work.

In September 2018, Shinhan Bank joined the EBRD trade facilitation programme (TFP) as a confirming bank. Korea Development Bank, Hana Bank and Woori Bank have also joined the programme.

Instruments issued or guaranteed by participating banks in the TFP may be secured by guarantees issued under the TFP. These include documentary letters of credit (L/Cs); trade-related standby L/Cs from issuing banks; deferred payment L/Cs, and L/Cs with post-financing advance payment bonds.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.