Despite the global economic slowdown, Korean banks are increasingly determined to set up more branches overseas to boost trade financing and diversify sources of profit, a report showed.

The report released by the Financial Supervisory Service on Monday said that securing more foreign currency assets was the key objective of the 2013 expansion plans of banks here.

Banks here opened a total of 11 branches abroad in 2012, largely in Southeast Asian countries including Vietnam, Myanmar and Indonesia. In 2013, they plan to build some 20 overseas branches altogether.

“We set up banks in Southeast Asia in exchange for sharing advanced financial know-how. Frankly, Southeast Asia is a small market, compared to countries like China,” a Shinhan Bank official said. “Expansion to mainland China is attractive but difficult.”

Breaking the glass ceiling set by local governments’ protectionism against foreign banks still remained a major challenge, he said.

In March 2012, Shinhan Card Co. and Shanghai-based UnionPay -― a union of 89 Chinese banks ― signed a memorandum of understanding for UnionPay’s support for Shinhan Financial Group and its affiliates’ business expansion into China, and vice versa into Korea.

Upon signing the pact, UnionPay requested that progress in the business partnership be kept confidential. About a year has passed since then, but progress on cooperation has been slow if not stagnant, an official from a Shinhan affiliate firm said.

Adding more branches in Europe and the Middle East was challenging as well, due to the European debt crisis and lack of networks, respectively, financial market observers said.

By Chung Joo-won  (joowonc@heraldcorp.com)