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The number of foreign financial firms' branches operating in Korea has slightly decreased over the past five years, as firms leaving the country outnumbered those opening new branches here. Although not a significant change, it may come as a big disappointment for the Seoul government which has sought to transform the country into a financial center in Northeast Asia since it first unveiled its hub vision in 2003.
According to data from the Financial Supervisory Service, a total of 163 financial companies ― ranging from banks, securities firms, asset managers and insurance companies ― from 30 different countries were doing businesses here as of the end of 2019. Out of the 163, 54 of them are banks, 23 are securities firms, 27 asset managers, 9 investment consulting firms, 29 insurance companies, 13 capital firms, and 8 savings banks.
By region, 44 percent of them, or 72 companies, are headquartered in the Asia Pacific region, while 33 percent of them, or 54 companies, are based in Europe, and 22 percent of them are from the U.S. and Canada. One company is headquartered in Africa.
Although this is the same number of firms as in 2018, it is down from 2015, when there were 166 firms.
Even compared to 2010, when the number of foreign banks and financial firms in Korea stood at 146, there has been only a small increase.
Goldman Sachs, Royal Bank of Scotland, BBVA, UBS-Barclays, and Macquarie Bank all closed down their Seoul bank branches due to poor profitability, either leaving the Korean market entirely or only keeping their securities arms.
While some attribute the decrease to the Korean financial authority's inflexibility and excessive regulations that make the Korean market less attractive, some argue that such decisions are more to do with their own global business restructuring, rather than the Korean market's own problems.
"I think the main reason behind the decrease in the number of foreign financial companies in Korea is two-pronged: both the global financial environment and the domestic situation," said Nam Gil-nam, senior research fellow at Korea Capital Market Institute.
"The last 10 years was a time when global financial companies, such as global IB, found it difficult to aggressively expand into other countries due to their own situations. The Korean market's attractiveness may not be great, but I think some of these global major banks or securities firms went through rough times during the past decade, and this probably is a main reason for their departure from Korea," Nam added.
