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Standard Chartered poised to slash offices in Korea

Standard Chartered Bank Korea's headquarters in Seoul / Yonhap
Standard Chartered Bank Korea's headquarters in Seoul / Yonhap

SC Bank Korea denies any immediate plans to shut down branches here

By Lee Min-hyung

Standard Chartered Bank Korea CEO Park Jong-bok
Standard Chartered Bank Korea CEO Park Jong-bok

Standard Chartered (SC) Bank Korea is facing mounting pressure to reduce the number of its sales offices here amid its mother group's decision to close down half of its branches, mostly in Asia.

The London-based international banking group recently unveiled the plan to cut its 776 branches globally down to around 400.

Although the group's profit structure is heavily reliant on Asia, the Korean subsidiary will nonetheless likely be a primary target for SC's global drive to close a number of offices. SC Bank Korea runs 199 sales offices nationwide, and the company is one of the major profit sources for the group.

Even if no specific plans have been fixed as to how many offices in Korea will be shut down or restructured, the lender has no choice but to downsize retail banking amid the rise of digital banking, at a time when more people than ever are making online transactions.

SC Bank Korea is one of the two biggest foreign-headquartered banks, along with Citibank Korea. The latter is moving to pull out its retail banking business, amid its deteriorating earnings. Citibank Korea reported 48.2 billion won in net profit during the first three months of this year, down by 19.4 percent.

With Citibank Korea confirming its plan to withdraw its consumer banking services here, SC Bank Korea has become the sole overseas lender operating a retail banking business here.

But the outlook remains murky for SC to keep expanding its presence in Korea amid foreign lenders' steady exodus from the Korean market. HSBC, another British bank, also decided to stop operating its consumer banking service here in 2013. In 2017, Barclays also left Korea, with Australia's Macquarie Bank deciding to discontinue its Korean business in 2019.

"The Korean financial market is not attractive enough for major overseas banking groups, as tough regulatory hurdles remain in place and few incentives are offered to non-Korean-headquartered financial firms, compared to in other Asian financial hubs, such as Hong Kong and Singapore," a bank industry source said.

"The pullout of Citibank Korea's retail banking services was also widely expected against the similar backdrop."

SC Bank Korea also could not disregard Korean financial watchdogs' regulatory pressure. The company fixed its 2020 dividend payout ratio at 19.06 percent, abiding by regulators' pressure for the 20-percent dividend rule. According to this rule, Korean and overseas banking groups were advised to set the upper limit of their dividend payout ratio at 20 percent, due to lingering virus-related uncertainties here.

"Even if foreign lenders have paid relatively less attention to Korean watchdogs' pressure, compared to Korean banks, SC and Citi accepted the restriction this year, which shows they are increasingly cautious about regulatory pressure from authorities here," the source said.

There is nothing strange about foreign lenders considering downscaling or withdrawing their Korean businesses amidst the financial environment here, according to the source.

SC Bank Korea said that it does not have any immediate plans to cut down its sales offices here despite the recent announcement from its head office.

"We do not have any specific plans to shut down sales offices from the near-term viewpoint," a spokesman at the lender said. "Even if the head office made this decision, we will not push for any drastic shutdown of offices in a short period of time."

Sales offices here will be gradually shut down from the mid- to long-term viewpoint, amid the rise of digital banking, according to the official.

Despite the downsizing of the offices, the lender pledged to increase its investment in areas with ongoing consumer needs.

"We have plans to open an integrated form of sales offices to handle both retail banking and securities," the official said. On a related note, SC said its first quarter net profit came in at 102 billion won, up 9.7 percent, year-on-year. Operating profit for the three months ending on March 31 was 134.4 billion won, up 12.5 percent year-on-year for the same period.





Lee Min-hyung mhlee@koreatimes.co.kr


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