Foreign Banks
Foreign affiliated banks continue to make easy loans through mortgage outsourcing. Criticism on unhealthy sales methods and the lack of management and supervision regarding this outsourcing has grown steadily, but Citibank and Standard Chartered maintain the high number of loans made in comparison to domestic banks.
For foreign affiliated banks with a weak domestic sales network, they have difficulties competing against local banks for loans. However, the fees paid to outsourcing increase loan interest rates and burden financial customers. Last year, the outsourcing fees paid from banks for new loans came to a total of 95.2 billion won (US$88.8 million).
Citibank, which had the second highest number of new loans from outsourcing among the local banks last year, actually made 817.1 billion won (US$762.4 million) in the first half of this year, which is now the new highest number.
SC Bank marked the highest number of new loans among local banks last year at 2.97 trillion won (US$2.77 billion). During the first half of the year, it marked 685.6 billion won (US$639.7 million), which is the second highest after Citibank.
The amount of loans made in the first half of the year through outsourcing is 42.7% of SC Bank’s total loans, which decreased from last year’s 64.0%. Citibank also dropped from last year’s 58.8% to 56.3% in the first half of this year. However, these numbers are still relatively high when compared to the 16.1% average of domestic banks.
In fact, Hana Bank made no new loans through mortgage outsourcing during the first half of this year, while Kookmin Bank marked 10% in outsourcing loans (419.2 billion won, US$391.1 million) last year and 4.6% (136.3 billion won, US$127.2 million) this year.