Standard Chartered Bank Korea has received a negative credit rating while paying out record dividends to its parent company in Great Britain.
The Korea Ratings Corp said on April 1 that Standard Chartered’s credit rating of ICR, unsecured debentures, and subordinated debentures was degraded from “stable” to “negative” by the NICE Investors Service at the end of last year.
Standard Chartered recorded a net loss of 64.6 billion won (US$59.0 million) last year. The Korea Ratings Corp predicted that Standard Chartered’s improvement in profitability would be restricted due to its conservative management and reduction of risk-weighted assets.
The Korea Ratings Corp said, “We may consider a degradation of Standard Chartered’s credit rating when the Standard Chartered Group’s support commitment appears to be weakened by continually reducing its domestic businesses or expanding its dividend scale.”
Standard Chartered bank reduced the number of its branches, which was 406 at the end of December in 2010, to 282 by the end of last year.
The British Standard Chartered group has depreciated all of the good will of Standard Chartered in Korea, it said in its 2014 earnings release.
In the same year, Standard Chartered provided high dividends of as much as 150 billion won (US$136.9 million) to the British Standard Chartered Finance headquarters, despite last year’s heavy loss, which has been controversial. Standard Chartered Bank has sent 850 billion won (US$775.8 million) of dividends to Britain in four years since 2009, and at the same time closed services such as its savings bank, capital, and securities.