Hyundai Capital Services, the auto finance arm of Hyundai Motor group, has received European Central Bank (ECB) approval to establish an automotive captive bank, Hyundai Capital Bank Europe (HCBE), in Germany.

The bank will be headquartered in Frankfurt, and will begin operations in December.

The plan is to gradually introduce wholesale and retail financing solutions linked to the sales of Hyundai and Kia cars, full service fleet management, act as an intermediary for insurance and warranty products of insurance companies in Europe, and offer deposit taking business for private customers and dealers.

The bank will start with €67.1m (£60.6m) capital, of which 80% has come from Hyundai Capital Services and the remainder from Kia Motors.

Up until now, Hyundai Capital Services Deutschland GmbH has functioned as a consulting firm providing financing solutions to Hyundai and Kia. Now, it will be able to provide direct financing.

“Hyundai Capital Bank Europe will compete with global powerhouses in Frankfurt, the heart of European finance. This is very different from other Korean financial institutions that have been targeting Korean consumers or businesses overseas,” a Hyundai Capital official said.

“According to market data, about 75 percent of car buyers in Germany use auto financing programs. That ratio of import car brands including Hyundai and Kia cars is 73 percent and we expect to bring this figure to be above average. HCBE will support Hyundai Motor Group sales,” he added.

According to the Group, Hyundai and Kia are expected to sell 94,000 and 58,000 units of cars respectively by the end of the year, which would give them 4.4% market share.

In the UK, Hyundai runs Hyundai Capital United Kingdom, a joint venture with Santander Consumer Finance. It also has entities in China, the U.S. and Canada.