By Park Hyong-ki
Four major local banks will keep their London branches going, despite concerns that the U.K.'s withdrawal from the European Union will put a hard dent in the former's growth, industry sources say.
|Canary Wharf / gettyimagesbank|
Shinhan Bank, KB Kookmin Bank, KEB Hana Bank and Woori Bank said their branches are staying put in London, despite Brexit doomsday reports and news, which they say have been blown out of proportion.
There has been a slew of news that some banks are considering relocating to other European cities such as Frankfurt, Germany due to fears over repercussions immediately following the U.K.'s EU exit on March 29, 2019.
Some stories say local nonbanks including KB Securities have decided not to pursue acquisitions in London because of such concerns.
"Like any other potential deals, KB Securities received a proposal to buy a building there, and it looked at the proposal, and that was it. It did not even pursue the deal. The news saying the company dropped it during negotiations because of Brexit is absolutely false," a KB Securities spokesman said.
The banks said they have no particular problems remaining in London, and they all have Frankfurt subsidiaries, except KB Kookmin.
"Our London branch does not have any issue," said a spokesman of Seoul-based Shinhan Bank, noting that it has a subsidiary in Frankfurt.
KB Kookmin Bank also said it is not considering relocating its London branch, which opened in May 2018.
Kookmin turned its London subsidiary into the branch last year so that it can extend more lines of credit in accordance with the U.K. regulations on capital buffers.
If a foreign investor opens a branch in London, the U.K. regulators will govern its business in accordance with the investor's headquarters' capital adequacies and credit rating. This will allow the investor's London branch to take more risks.
KB Kookmin said it had prepared to turn its London subsidiary into the branch for two years.
Industry sources say London is still one of the top global financial hubs, incomparable to Frankfurt, Germany.
"We can't ignore the fact that London has a long history in finance and is a major hub in Europe. That's not going to go away as soon as the U.K. leaves the EU," said an industry source.
Although the British pound will face volatility in the aftermath of the withdrawal, it is still one of the key global currencies, the source added.
The worst case scenario has emerged that the U.K. economy will contract as much as 8 percent after Brexit.
The U.K. financial authorities have been addressing concerns and ensuring the market will remain stable and "stress-free."