Foreign Fund Operators May Withdraw from Korean Market
Foreign fund operators’ concerns are mounting with Citibank having decided to withdraw from the South Korean retail finance market.
According to the Korea Financial Investment Association, the principal of Fidelity International funds sold via Citibank Korea until the end of February this year is 493.5 billion won and the amount is 181.7 billion won, 176.1 billion won and 128.5 billion won in the case of BlackRock, AllianceBernstein and Schroders, respectively. In addition, Eastspring Asset Management and Barings supplied 88.3 billion won and 32 billion won of funds via the bank. The current total principal in Citibank Korea amounts to 1,797.9 billion won.
Those foreign fund operators have sold their funds in South Korea mainly via Citibank Korea and Standard Chartered Korea unlike domestic fund firms, which have worked with domestic banks and securities companies as fellow subsidiaries. In other words, foreign fund firms’ business in South Korea is likely to be substantially affected by Citibank Korea’s decision with the absence of such subsidiaries hindering business expansion in the market.
In the case of Fidelity International, the current principal in the market is 3,191 billion won, and it includes 15 percent provided via Citibank Korea, which is its largest marketing channel in the market. The figures are 873.5 billion won and 14 percent in Schroders, 1,747.6 billion won and 10 percent in AllianceBernstein, and 961.8 billion won and 18 percent in BlackRock.
Those foreign operators may withdraw from the South Korean market if public offering fund marketing becomes increasingly difficult. Goldman Sachs did so back in 2012, and then J.P. Morgan and Macquarie Investment Management followed suit. More recently, Franklin Templeton is considering disposing of its retail business in the market.