Foreign Securities Companies Send Tens of Billions of Won Overseas Every Year

There is a growing controversy that foreign securities companies sent most of money they earned in South Korea to their headquarters in other countries last year.

According to investment banking (IB) industry sources on April 3, foreign securities firms, such as Morgan Stanley, Credit Agricole, Credit Suisse (CS), Deutsche Bank Securities and Citigroup Global Market Security, have decided to send most of their net profits earned in South Korea last year to their headquarters overseas.

Morgan Stanley Securities held a board meeting on March 27 and voted for a scheme to send 14 billion won (US$13.26 million) of dividends to the headquarters. The approximate dividend payment date is May 23. The company made 36.6 billion won (US$34.67 million) worth of net profits last year and it has decided to send more than half of them to its headquarters based overseas.

CS Securities, which earned the most profits among domestic IBs, also decided to send a whopping 130 billion won (US$123.18 million) worth of dividends to its headquarters at the board meeting on March 28.

At the shareholders meeting on March 29, Deutsche Bank Securities also decided to 2.2 billion won (US$2.08 million) worth of dividends to its headquarters. Considering the fact that the company posted 2.45 billion won (US$2.32 million) in net profits last year, it is a substantial amount of dividends that surpasses more than 90 percent.

The Seoul office of Credit Agricole Securities Asia also announced on March 30to send 3.2 billion won (US$3.03 million) worth of dividends to Credit Agricole Hong Kong. The company earned 3.2 billion won (US$3.03 million) of net profits last year and executed 100 percent of dividends.

Credit Agricole has entered the South Korean market running business in earnest from January 2017 after acquiring the Seoul office of U.K-based RBS Asia Securities that announced to withdraw from the South Korean market in November 2016. After the acquisition, the company is sending all the money earned in the market to its headquarters.

Citigroup Global Market Security, which raked in 52.6 billion won (US$49.79 million) last year, also decided at the shareholder meeting on March 13 to send 40.5 billion won (US$38.32 million) worth of dividends to its headquarters at the end of April.

The industry says that there is nothing new about foreign securities companies’ high dividend payments but they are too focused on wiring money to their headquarters to make a reinvestment in the South Korean market or have internal reserves. An official from the IB industry said, “Since the companies also need to reinvest in the market or secure internal reserves to run business in South Korea, financial authorities need to provide a strict guidance.”