Western financial firms reduce presence in South Korea

Western financial companies have been reducing their presence in South Korea since 2008, data showed Monday, apparently as the global economic slump dealt a harsh financial blow to their headquarters. Fifteen western financial firms operating here have either withdrawn or reduced their businesses here since 2008 when the global financial crisis hit the world economy, according to the data compiled by the Financial Services Commission, cited by the state-run news agency (Yonhap). Of the firms tallied, 12 were from the United States and Britain, while the others were based in Germany, France and the Netherlands. Three banks withdrew or downsized their operations here over the cited period, with HSBC Holdings Plc pulling its retail banking out of South Korea to focus on the corporate banking service, closing 10 of its 11 branches here. Two foreign securities firms, including a local unit of U.S. Prudential Financial Inc. which was acquired by South Korea’s Hanwha Securities Co., also closed their businesses here, the data showed. Four foreign-based asset management firms, five insurers and two credit financial firms either downsized or closed their operations altogether in Seoul. “The restructuring measures by U.S. and British companies came amid the financial slump in their headquarters,” an official from Seoul’s financial watchdog said. “Their performances here also remained dull.” Market watchers added the pullout of foreign firms also came as they failed to localize their financial services to meet the needs of South Korean consumers. Meanwhile, Chinese and Japanese financial firms expanded their presence in the local market over the cited period, on the back of robust economic growth and foreign-exchange advantages. The local branch of the Industrial and Commercial Bank of China saw its net assets expand 4.09 trillion won (US$3.83 billion) at end-June this year from five years earlier. The South Korean branches of the Bank of China and the China Construction Bank also saw their net assets surge more than three-fold over the cited period, reflecting the rising presence of Chinese firms in the local market. Market watchers added four Japanese banks operating in South Korea, including Sumitomo Mitsui Banking Corp. and Mizuho Corporate Bank, also beefed up their equity capitals to garner a larger market presence here.