HSBC may pull plug on retail bankHSBC Korea is considering pulling its retail banking unit out of Korea due to its mounting losses in the sector, industry sources said yesterday. The bank entered the local market in 1982.
Although the Korean unit of the British banking giant posted a net profit of 213.5 billion won ($198.2 million) last year, most of this came from the corporate banking sector, which also covered the losses from its underperforming retail banking unit, they said.
A spokeswoman for the British banking giant confirmed to the Korea JoongAng Daily that the company “is looking at all available options [regarding what to do with the retail banking unit].”
Industry insiders say HSBC is mulling closing it down after it failed to sell 11 local branches to KDB Financial Group in July.
Negotiations broke down as the two sides failed to narrow their differences over guaranteeing the job security of staff.
But the Financial Services Commission (FSC) said it has not yet received any notice from HSBC Korea on the matter.
“Foreign banks these days are reluctant to expand their retail banking operations in the country as the government is trying to curb snowballing household debt,” said an official at the FSC. “But no official request has been made from HSBC seeking approval for closure.”
If HSBC pulls out its retail banking sector, market observers say this could deal a severe blow to the Korean government, which has been eager to promote the country as a financial hub of Asia. Yesterday’s news was compounded by the fact that it follows an announcement by Goldman Sachs Asset Management on Nov. 13 that it will end its business in Korea just five years after entering the market.
Goldman Sachs posted a net loss of 7.2 billion won last year, the largest loss reported by a foreign asset management firm in the country during the period.
ING Life Insurance and Woori Aviva Life Insurance are also pulling out of Korea. ING Group is currently in talks with KB Financial Group about selling its Korean insurance unit.
Britain’s Aviva Group will sell its 47 percent stake in Woori Aviva Life Insurance to Woori Financial Group.
By Kim Mi-ju [email@example.com]