Dominated by Foreign Investors
Foreign investors hold more than a 70 percent stake in major commercial banks in South Korea, according to the data submitted by the Financial Supervisory Service (FSS) to a ruling party lawmaker on Oct. 11.
The foreign equity ownership of South Korea’s top six banks, including KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank, SC Cheil Bank and Citibank Korea, stood at 73.3 percent on average as of the end of last year, showed the FSS data, which were presented to Rep. Koh Yong-jin on the National Assembly's National Policy Committee.
By bank, Hana Financial Group, the holding company of KEB Hana Bank, saw its foreign equity ownership increase 12.2 percentage points from 61.8 percent in 2013 to 74 percent at the end of last year.
The foreign equity ownership of KB Kookmin Bank also rose 5.9 percentage points from 63.5 percent to 69.4 percent over the same period. The National Pension Service is the largest shareholder of KB Kookmin Bank with a 9.6 percent stake, but U.S. investment firm JP Morgan is the second largest shareholder with a 6.2 percent stake.
Shinhan Financial Group, the holding company of Shinhan Bank, also saw its foreign equity ownership grow 4.2 percentage points from 64.7 percent to 68.9 percent. The group’s largest shareholder is the National Pension Service with a 9.6 percent stake but its second largest shareholder is U.S. asset management firm BlackRock Fund with a 5.1 percent stake.
SC Cheil Bank, which was acquired by U.S. investment firm Newbridge Capital in 2000, was sold to U.K.-based Standard Chartered Bank in 2005. Accordingly, Standard Chartered Bank has owned a 100 percent stake in SC Cheil Bank from 2005.
The largest shareholder of Citibank Korea, which took over Hanmi Bank in 2004, is Citibank Overseas Investment Corporation (COIC) established by U.S.-based Citibank for overseas investment. COIC has held a 100 percent stake in the bank from 2004.
In addition, foreign investors own over 50 percent stakes in regional banks. The foreign equity ownership of BNK Financial Group, the holding company of Busan Bank, and DGB Financial Group, the holding company of Daegu Bank, reached 50.7 percent and 60.6 percent, respectively, as of the end of last year, surpassing the 50 percent level. JB Financial Group, the holding company of Jeonbuk Bank and Gwangju Bank, also saw its foreign equity ownership increase from 15 percent in 2013 to 41.9 percent at the end of last year.
As the foreign equity ownership of the nation’s commercial banks continues to rise, dividends going abroad have been astronomically growing every year. The six banks posted 7.62 trillion won (US$6.67 billion) in net profit last year and they paid out 2.78 trillion won (US$2.43 billion), or 36.4 percent of the profit, in dividends. Based on the foreign equity ownership, 67.2 percent of the dividends, or 1.87 trillion won (US$1.63 billion), was paid out to foreign investors.
Koh said, “Most of South Korea’s commercial banks have been dominated by foreign funds since the 2008 financial crisis. The foreign investors tend to focus on short-term profits rather than social responsibility.”