Foreign banks trim back dividendsForeign banks operating in Korea have cut back dividend payouts for fiscal 2012, after financial authorities and the incoming government warned about doling out excessive profit to shareholders, sources said yesterday.
The board of Standard Chartered Bank Korea will vote on an additional dividend payout of around 100 billion won ($92 million) for fiscal 2012 later in the day, according to bank officials.
The local unit of the British banking group paid shareholders an interim payout of 100 billion won in September last year.
The bank had initially sought to dole out some 200 billion won in term-end dividends for 2012 but halved the amount as it faced pressure from the financial watchdog to reduce it.
Its combined dividend for 2012 will thus amount to 200 billion won, a level similar to the amount paid out in the past two fiscal years, the sources said. The bank reaped an annual net profit of 400 billion won in 2012.
Citibank Korea, the Seoul-based unit of U.S. banking giant Citigroup, paid a total of 80 billion won in dividends last year, down from 130 billion won a year earlier. The bank saw its net income tumble 56 percent on-year to 200 billion won in 2012.
The banks’ dividend cut came as the financial regulator called on financial firms not to pay out high dividends as public criticism mounted over the banking sector’s corporate greed.
Lone Star Funds, which previously controlled Korea Exchange Bank, had been under fire, as its several attempts to pay out massive interim dividends were seen as trying to flee Korea after fattening its pockets.
The two foreign banks are likely to refrain from giving high dividends for this year as well, as the incoming government, led by President-elect Park Geun-hye, has put a focus on “economic democratization”, which refers to a policy aimed at narrowing the wealth divide and promoting fair competition between conglomerates and smaller firms.
The financial authorities said they are poised to keep closer tabs on foreign banks’ dividend payouts, possibly calling bank’s top officials in for an explanation if the dividend is deemed too high. Yonhap