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Foreign financial institutions are rushing to South Korea
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Local institutions face competition in a number of industries
Foreign financial institutions are rushing to South Korea to capitalize on more liberalized local financial markets, industry sources said. The rush comes as the South Korean government moves to consolidate its "industry-based" financial regulatory system into a "function-based" one, allowing market players to engage in financial activities ranging from securities and futures to insurance and asset management, rather than having to focus on one. Foreign firms which have already begun business here, save for HSBC and CitiBank, have focused on providing services for corporate customers. But as competition is getting increasingly fierce, they are eyeing expansion into new areas currently dominated by local firms, including retail banking.On June 27, Goldman Sachs, one of the world’s largest investment banks, announced that it had received the green light from South Korean financial authorities to open a branch here and provide not only retail banking services but also exchange services and interest rate-related services targeting corporate customers. Merrill Lynch, sources said, is also considering making a foray into the retail banking market here, a move which could have significant impact on the local financial sector as the firm is expected to provide a wider range of services, combining banking and securities. Standard Chartered Group, the largest shareholder of SC First Bank Korea, has recently completed preparation to open its lending business in Seoul. ING Group, JP Morgan, and others have completed or are preparing to file for a setup of asset management businesses here, according to industry sources. Pension funds will be another lucrative market for foreign financial firms, as South Korea’s population demographic is a rapidly aging one.
