3 Min Read
HONG KONG (Reuters) - HSBC Holdings Ltd (HSBA.L), Europe's biggest bank, will close its retail branch network and wealth management businesses in South Korea, leaving only the global banking and markets unit that serves corporate clients.
The closures, which begin on July 8, form part of HSBC's global review which has seen it shut or dispose of 52 businesses worldwide since May 2011, the bank said on Friday.
HSBC will seek regulatory approval to close 10 of its branches in South Korea, leaving behind a single office to support the global banking and markets unit which helps corporates raise capital, trade and invest.
"I don't find this a surprising decision. It's consistent with what they've done elsewhere in closing subscale operations and makes sense given the less favorable economics of running retail banking in Korea," said Ian Gordon, an analyst at Investec Securities who covers HSBC.
A Hong Kong-based HSBC spokeswoman said 230 staff in Korea will be affected by the closures. They will be offered a redundancy package or the choice of working at the bank until the wind-down is completed, she said by telephone.
HSBC is not alone among global banks in having struggled to make progress in retail banking in Korea. Standard Chartered (STAN.L) may take a more than $1 billion hit on its Korean business, analysts said last month, after an aggressive restructuring due to weak returns, a dispute with staff and tough regulations.
Standard Chartered has had troubles with its First Bank business since it bought it in 2005 for $3.3 billion. It said in late June that it will assess whether to write off some of the $1.85 billion goodwill value it has assigned to the business.
HSBC itself tried to invest more heavily in Korea by buying a controlling stake in Korea Exchange Bank in 2007, before abandoning the attempt in September 2008 amid regulatory difficulties and the developing global financial crisis.
The bank's decision to retain its global banking and markets unit in Korea makes sense, said Investec's Gordon, allowing it to retain the profitable business of serving global clients who have a presence in the country.
Reporting by Lawrence White; Editing by Ryan Woo