South Korea’s Financial Supervisory Service urged financial institutions based in Korea to foster a “long-lasting relationship” with Southeast Asian countries in a closed-door seminar held April 19.
At an event joined by representatives of 16 Korean financial institutions at the Conrad Hotel in Seoul, FSS First Senior Deputy Gov. Yoo Kwang-yeol stressed the significant role Korean financial firms play in localizing offshore units in Southeast Asian nations that contribute to the advancement of the region’s financial industry.
FSS First Senior Deputy Gov. Yoo Kwang-yeol speaks at a seminar joined by representatives of 16 domestic financial institutions held on April 19.
“(Financial institutions in Korea) should highlight their role as a partner for mutual benefit and common prosperity (in Southeast Asian countries), instead of regarding them as a market for higher profit margins,” Yoo said in his closing speech at the seminar.
He added that the institutions’ units in Southeast Asia should try to offer financial services that better meet the needs of local customers, and that they should hire more local experts to contribute to the regional economy.
The financial watchdog also discussed what its officials had learned from meetings with financial authorities in Thailand in November, Malaysia in December, and Cambodia, Indonesia and Vietnam in March.
“Financial regulators in Indonesia and Vietnam were interested in the way the FSS oversees financial technologies, cryptocurrencies and peer-to-peer lending services, as well as oversight on cybercrimes,” Yoo said. “They also asked for FSS assistance to improve their macroprudential regulation and revise rules for brokerages and insurers.”
Korean financial institutions are expanding their presence in Southeast Asian countries amid the government’s “New Southern Policy” initiative, involving a bigger focus on the region.
As of end-2018, financial institutions in Korea -- banks, brokerages, asset management firms, insurers, nonbank lenders and holding firms -- operated 52 entities in Vietnam, 25 in Indonesia, 21 in Myanmar, 18 in Singapore and 14 in Cambodia, among others.
For domestic banks, their assets for business in Vietnam rose 12.4 percent to $6.4 billion on-year as of end-2018, while those for Indonesia soared 10.1 percent to $6.3 billion, according to FSS data. Their net income in Vietnam more than doubled on-year to $131.8 million in 2018, while their net income in Indonesia slipped 13.3 percent to $87.1 million.
FSS First Senior Deputy Gov. Yoo Kwang-yeol (11th from left) and representatives of Korean financial institutions pose for a photo during a seminar held in Seoul on April 19.
This comes in sharp contrast to the lack of Korean presence in the financial sector in other major Southeast Asian countries like Thailand and Malaysia. According to FSS estimates, Thailand housed three overseas offices of Korean FIs, while Malaysia had only two units.
Thailand, the second-largest economy in Southeast Asia, has yet to allow the entry of Korean FIs since the 1997 financial crisis, when commercial banks like Shinhan Bank and Korea Exchange Bank -- now merged with KEB Hana Bank -- exited despite the government’s request to stick around. This is coupled with Thailand’s current regulations which prevent banks of non-ASEAN countries from opening a branch.
By Son Ji-hyoung (firstname.lastname@example.org)