Foreign banks to face greater scrutiny in South Korea

31 May 2011

Foreign banks in South Korea look set to face greater scrutiny after the country's financial watchdog announced it is to monitor their branches more closely.

The move comes after a number of lenders improperly outsourced trading operations that involved their funds in Korea.

Sanctions have already been imposed on HSBC Holdings and Credit Agricole - a French retail bank that has 11,500 branches worldwide - Financial Supervisory Service (FSS) deputy governor Kim Yung-Dae revealed.

In a statement, the FSS noted: "Foreign banking branches are considered to have a great effect in increasing the volatility of capital flows in and out of the market."

Mr Yung-Dae explained that an announcement due in June or July is likely to see another as-yet unidentified bank from Europe sanctioned, with concerns growing that rapid foreign capital flows could pose potential risks.

The FSS is to begin inspecting 15 foreign banks in Korea every year going forward.

By Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development