Citibank will aggressively consider launching a holding company in South Korea, in line with revised local laws, and will expand distribution channels to grow its market share, the head of its Korean unit said on Thursday.

The South Korean government has recently loosened regulations over the formation of holding companies and made it easier for them to make overseas acquisitions, as part of efforts to promote the country as a regional financial centre.

In the past, regulations had not allowed foreign financial companies to set up holding companies, Ha Yung-ku, Citibank Korea CEO, told reporters at a news conference.

Now that the law has changed, we will consider it aggressively. (Under a holding company) we can strengthen corporate governance and cost efficiency.

Ha did not give a timeframe for the possible move.

Citibank is not alone in seeking a holding company format, with competition for traditional deposit-taking and loan extension deepening and lending margins squeezed.

Under a holding structure financial firms can leverage their business networks, cross-selling a variety of financial products to group clients, and can also raise funds more cheaply given the generally higher credit rating of a holding firm.

UK-based Standard Chartered was also interested in forming a holding company in South Korea to strengthen brokerage and insurance businesses, the chief of its Korean operations had told reporters in October.

Top domestic retail bank Kookmin is preparing to transform into a holding group, as it suffers from the money flight into higher-yielding accounts offered by brokerages.

Citibank Korea runs 233 branches across the country with 6,065 employees, but that is still below major domestic rivals.

To overcome the weaker sales channels, Citibank will open more branches and secure a variety of other business networks, Ha said, without elaborating.

Citigroup bought the former KorAm Bank for $2.7 billion in 2004, but has had a limited presence in Asia's number four economy as it has taken longer than expected to integrate KorAm.

The bank had said it was aiming for a 10 percent share in South Korea's retail banking by 2010, from 4-5 percent in both lending and deposits in 2006.

(Reporting by Kim Yeon-hee; Editing by Keiron Henderson)