By Yoon Ja-young
Foreign banks operating in Korea are sending on average 1.2 trillion won ($1.07 billion) to their headquarters as dividends and royalties among other payments each year. While taking most of what they earn here out of the country, they are apparently giving little back to the local community, data showed Sunday.
According to the Financial Supervisory Service (FSS) data submitted to Rep. Park Yong-jin of the ruling Democratic Party of Korea, 102 foreign financial businesses operating in Korea ― 40 banks, 11 brokerages, 28 insurers, 23 asset management companies ― sent a total of 6.7 trillion won to their headquarters between 2013 and the first quarter of this year.
The payments include dividends, royalties, IT service fees, advertising costs and consulting fees.
This is expected to surge steeply this year, as 631.2 billion won was already remitted in the first quarter, which is half the annual average for the past five years.
Foreign banks were especially sending huge sums back home ― 3.5 trillion won over the past five years. This contrasts with the financial regulator's recommendation that financial holding companies should refrain from huge dividend payouts to secure adequate capital.
Standard Chartered (SC) Bank Korea sent the biggest sum home at 878.8 billion won over the five-year period, followed by HSBC with 830.2 billion won. The latter remitted 212.2 billion won in the first quarter of the year, double the 110.1 billion won last year. Citibank Korea came third with 471.3 billion won. Representatives for the banks were contacted but were not available for comment.
The dividend payout ratio of the foreign banks is about twice that of local ones.
Foreign brokerages also sent 1.7 trillion won to their headquarters during the five year period while foreign insurers got 1.2 trillion won out of the country. Foreign asset management companies sent 391.5 billion won.
While there is no way to make foreign financial companies decrease the sum they send home, the massive outflow of what they have earned here has been causing controversy each year as they seem rather stingy in giving back to the local community. According to reports on the banking industry's social contribution programs released by the Korea Federation of Banks, Citibank Korea and SC Bank Korea came the lowest in spending to earnings ratio. They were not contributing much to job creation either as they have been closing down branches each year.
"Despite controversy, the foreign financial companies are continuing the predatory practice of sending money to their headquarters. I plan to submit a bill which could make them reinvest part of their earnings into the local market or in job creation," Rep. Park said.
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| SC Bank Korea CEO Park Jong-bok |
According to the Financial Supervisory Service (FSS) data submitted to Rep. Park Yong-jin of the ruling Democratic Party of Korea, 102 foreign financial businesses operating in Korea ― 40 banks, 11 brokerages, 28 insurers, 23 asset management companies ― sent a total of 6.7 trillion won to their headquarters between 2013 and the first quarter of this year.
The payments include dividends, royalties, IT service fees, advertising costs and consulting fees.
This is expected to surge steeply this year, as 631.2 billion won was already remitted in the first quarter, which is half the annual average for the past five years.
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| Citibank Korea CEO Park Jin-hei |
Standard Chartered (SC) Bank Korea sent the biggest sum home at 878.8 billion won over the five-year period, followed by HSBC with 830.2 billion won. The latter remitted 212.2 billion won in the first quarter of the year, double the 110.1 billion won last year. Citibank Korea came third with 471.3 billion won. Representatives for the banks were contacted but were not available for comment.
The dividend payout ratio of the foreign banks is about twice that of local ones.
Foreign brokerages also sent 1.7 trillion won to their headquarters during the five year period while foreign insurers got 1.2 trillion won out of the country. Foreign asset management companies sent 391.5 billion won.
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| HSBC Korea CEO Jung Eun-young |
"Despite controversy, the foreign financial companies are continuing the predatory practice of sending money to their headquarters. I plan to submit a bill which could make them reinvest part of their earnings into the local market or in job creation," Rep. Park said.
