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US bank BNY Mellon to downsize its operations in South Korea

US bank BNY Mellon to downsize its operations in South Korea
US bank BNY Mellon to downsize its operations in South Korea

American investment banking corporation, BNY Mellon, is reportedly planning to downsize its operations in South Korea as well as retract its financial investment business out of the nation, claim sources.

Supposedly, South Korea’s financial regulator, Financial Services Commission (FSC), had recently approved a request by BNY Mellon’s Seoul branch to cease its financial investment business as well as trust services.

For the uninitiated, foreign financial institutions need to seek the FSC’s permission to downsize or exit their operations in the country.

BNY Mellon had entered South Korea in 1988, when it established a branch in the nation’s capital, Seoul. As of now, apart from its main branch, the bank has two representative offices in the country, BNY Mellon IM Korea in Seoul, which is its asset management office, and another office in Jeonju, in the North Jeolla Province.

The decision to downsize comes just years after the New York-based global investments company opened its office in Jeonju in 2019 to further strengthen its partnership with the National Pension Service (NPS) of South Korea. NPS had selected BNY Mellon as the global custodian for its fixed income mandate.

Many global banking institutions have either downsized their operations or pulled out of the market, with British global investment banking group HSBC having pulled out its consumer banking business in 2013.

Most recently American banking group Citigroup announced its exit from the retail banking business in South Korea as well as in 13 more global markets.

Foreign companies claim that the country’s unfavorable tax rates, as well as strict regulations, have become a major obstacle in carrying out their operations, with the government also often issuing strict orders to banks like putting caps on household lending and dividend payouts.

CEOs of 17 foreign financial institutions, that were operating in the market last year, complained that South Korean authorities were continuously making multiple interpretations of financial regulations, confusing their business.

In a meeting with the former Chairman of FSC, the CEOs also complained that the country’s 52-hour week system was proving to be a hurdle for businesses to communicate with their overseas headquarters.

Source credit: http://www.koreaherald.com/view.php?ud=20211212000151

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Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.