Foreign banks expand Korean operations amid China’s slowdown
Major foreign banks have actively increased staff at their operations in South Korea to offset growing uncertainty in their business in China, grappling with a growth slowdown, with the relatively more vibrant financial market of Asia’s fourth-largest economy.
According to the Financial Supervisory Service (FSS) on Wednesday, total employees at the Korean operations of 35 foreign banks stood at 3,010 as of the end of 2023, up 67 in a year and 134 in two years.
The number of employees at their Korean operations lately started bouncing back after foreign banks had streamlined their Korean business since 2017 when the total number of their Korean staff reached 3,039.
The people on the payroll of the Korean operations of JP Morgan Chase & Co., the first foreign bank that opened a Korean branch, reached 200 as of the end of 2023, doubling from 2010 when its Korean employees exceeded 100 for the first time.
French multinational bank BNP Paribas, which first tapped the Korean financial market in 1976, added 13 employees last year, elevating its Korean business staff to its largest-ever 142.
“Given the very conservative culture of the banking industry, their aggressive recruitment effort is a rare move,” said an official in the banking industry.
Industry observers attribute the recent trend to the growing risk in China’s financial sector taking a hit from the crippling World’s No. 2 economy amid the ongoing real estate crisis, leading foreign banks to depart the country to find better deals elsewhere like Korea.
“We have recently hired people for risk management and compliance,” said an official from a foreign bank in Seoul. “Sales and risk management have been considered a one-person job at foreign banks’ Korean branches operated by only a small staff. By separating the two tasks, the bank is set to bolster its sales activity in Korea.”
RECORD PROFITS
Foreign banks saw record earnings in the relatively more robust Korean financial market last year, rationalizing their decision to expand Korean business.
Excluding Credit Suisse suffering massive losses, the total net profit of foreign banks’ Korean operations hit 1.56 trillion won ($1.1 billion) in 2023, up 6% from the prior year.
It was the highest-ever result since the FSS started announcing related data.
Of all, the Korean operations of HSBC Holdings plc reaped the largest 263.4 billion won in net profit last year, followed by Japan’s MUFG Mitsubishi UFJ Bank with 141.1 billion won.
HSBC’s stellar performance in Korea came even though it was slapped with massive fines along with BNP Paribas for naked short-selling, a practice banned in the Asian country, last year.
China Construction Bank and Bank of America also joined the list of top earners in Korea last year.
A financial industry official projected foreign banks will continue to expand their Korean business unless there is any major adverse event in the global economy.
Reflecting this trend, the Korean financial regulators should amend regulations and improve infrastructure to invigorate the country’s financial industry, the official added.
The world’s largest cooperative financial institution Crédit Agricole Group, Development Bank of Singapore, Dutch bank ING and China Construction Bank also bumped up their Seoul staff to their record highs last year.
Of the total 35 foreign banks operating in Korea, only six banks, including MUFG, Yamaguchi Bank and loss-making Credit Suisse, cut Korean payroll last year.
Write to Jae-Won Park at wonderful@hankyung.com
Sookyung Seo edited this article.
