Foreign firms struggling in hard financial market

Foreign financial firms have been losing their footholds in Korea this year, with some exiting the market in the face of worsening performances and cultural bias, industry sources said yesterday.

The market share of Standard Chartered Bank Korea based on its total amount of loans stood at 3.1 percent as of the end of June, compared with 3.6 percent a year earlier, according to the bank and regulator’s data. The comparable figure for Citibank Korea came in at 2.2 percent, down from 2.3 percent in the same period.

The combined market share of 11 overseas life insurance companies operating here reached 18.6 percent in the first quarter, falling from 20.7 percent a year earlier. Foreign non-life insurers’ local market share has also dropped to about 2 percent. The insurers’ market share was calculated based on the amount of their insurance premiums.

The fall in market shares is largely attributable to weak performance stemming from the economic downturn here and abroad, experts said. Foreign financial firms have been suffering from a double whammy as both their overseas-based headquarters and Seoul offices saw profits worsen.

Goldman Sachs Korea said last month it will be shutting down its asset management operation after five years of running business here, followed by Woori Aviva Life Insurance, the local unit of the British Aviva Insurance. HSBC in Korea is reportedly mulling closing down its retail banking business here.

In the case of the Korean market, the situation has been more unfavorable, experts noted, because of tight regulations on foreign financial companies and a market environment dominated by home-grown players.

“It’s hard for us to follow Korean law and our rules at the same time. We’re also lagging behind in mobile banking, at which Korean firms are doing best,” a foreign bank official said.

Another bank official mentioned a bias toward foreign financial firms, saying, “If an overseas bank tries to sell off assets here, people think of it as stealing money from their soil, while it’d be an effective business strategy for a local bank.”

The combined market share of 23 foreign asset management firms in Korea shed to 15.9 percent last month from 17.1 percent a year ago, of which nine players logged net losses as of end-June, according to the data.

Yonhap