Foreign employees of the Jeonbuk Bank Foreign Financial Center in Suwon pose for a photo (JB Financial Group)

South Korean banks are notorious among foreign residents seeking loans and other financial products for their stricter screening and frequent refusals over Korean customers.

But they have recently begun to recognize that foreigners here could diversify their sources of income.

At the forefront of change is JB Financial Group, a company that is more regional than the four main commercial banking groups here – KB, Shinhan, Hana and Woori – but which nevertheless has a strong network across the country and abroad. foreigner.

The group’s flagship commercial lender, Jeonbuk Bank, recently eased the terms of its key loan product for overseas customers by including holders of the H-2 visa, also known as the “Work and Visit Visa”, as borrowers. eligible. Previously, only foreigners with an E-9 non-professional work visa could apply for the loan. The service lends up to 20 million won ($16,500) at an annual interest rate of between 11 and 15 percent. Although higher than the average interest rate of loan products offered by commercial banks to Korean citizens, it offers a safer option for foreigners who often have to turn to less reputable options to borrow money.

Last year, the bank extended loans to 8,949 overseas borrowers, with the total value of loans issued to them amounting to 57.6 billion won as of the end of February this year.

The bank currently operates its main financial center for foreigners in Suwon, Gyeonggi Province, and a second branch in Seoul’s Dongdaemun area with several foreign tellers from 11 different countries, mostly members of the Association of United Nations. ‘South East Asia. It also has four salons across Korea focused on overseas customers.

“Granting loans to foreigners is a bit more risky for banks because it’s not as easy to check their credit ratings or their assets here,” said an employee of one of the big four banks here. on condition of anonymity.

“But we are making efforts to change that,” the employee added.

Shinhan Bank, one of the major lenders here, launched its first savings account designed exclusively for foreigners in July last year. The term is one year and allows customers to submit up to 3 million won per month, with an annual return of 1.85%. It is designed to automatically transfer money to a foreign bank of the applicant’s choice on maturity, which sets the product apart from all other savings accounts offered by competing banks.

“The product allows our overseas customers who choose to return to their home countries before its deadline to enjoy its benefits regardless of their location,” a Shinhan Bank official told the Korea Herald.

“Foreigners have the right to open the same savings accounts as Korean citizens, but sometimes it’s the little things like these that matter. Some 2 million foreign residents in Korea are a new market for us.

Shinhan and rival KB Kookmin also offer special loan products for foreigners looking to rent houses for a certain period. They offer loans for the Korean “jeonse” system, both of which were launched around 2020, to allow foreigners to borrow up to 200 million won. Jeonse is referring to a two-year lease in which tenants pay landlords a lump sum deposit and collect it when they move out.

By Jung Min-kyung ([email protected])