Racks in Social Responsibility

The head office of SC Cheil Bank Korea.
The head office of SC Cheil Bank Korea.

 

SC Cheil Bank Korea, which is wholly owned by London-based Standard Chartered Bank, is caught up in controversy over its latest decision to pay out 80 billion won (US$71.24 million) of dividends as the bank edged back into the black last year. There have also been rumors that it would pull out of South Korea.

In addition, SC Cheil Bank came under fire in 2014 when it paid 150 billion won (US$133.57 million) of dividends, though the bank posted 75.3 billion won (US$67.05 million) in deficit. It received “punitive warning” related to management from the Financial Supervisory Service at that time.

SC Cheil Bank had seen its operating profit decrease every year from 387.3 billion won (US$344.88 million) in 2010 to 350.2 billion won (US$311.84 million) in 2011 and 234.7 billion won (US$208.99 million) in 2012 but it had kept increasing its percentage of dividends from 62.04 percent in 2010 to 78.14 percent in 2011 and 102.72 percent in 2012. The bank had sent most of its net profits to the headquarters in the U.K., raising controversy.

The labor union said, “We can understand the payment of appropriate levels of dividends but excessive dividends can cause problems. With growing dividends, the management should also give employees the same level of rewards.”

Meanwhile, SC Cheil Bank has been suffering from constant rumors that it will withdraw from the South Korean market. The bank downsized the workforce by 1,000 through special retirement in 2015. Considering the fact that it employed 5,200 workers at that time, about 20 percent of its employees left the company. SC Cheil Bank also reduced the number of its branches by as much as 71 from 283 in 2014 to 212 in 2015.

An official from the investment banking industry said, “SC Cheil Bank is pursuing a differentiation strategy through tiny branch offices in order to survive in the domestic market. But, the bank is losing reliability in the market due to constant rumors over the withdrawal. So, it should come up with an institutional strategy to reinvest its profits earned in the South Korean market in the domestic market in its bid to solve the problem.”  

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