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SC set to focus on wealth management after Citi's exit

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Standard Chartered Bank Korea CEO Park Jong-bok delivers a speech at its headquarters in Seoul, Jan. 6. Yonhap

By Lee Min-hyung

Standard Chartered (SC) Bank Korea is set to enhance its wealth management business as part of a key business strategy after Citibank Korea’s exit from retail banking operations here.

Citi’s planned pullout of its retail banking operations raised alarm bells for SC Bank Korea, which will become the only non-Korean lender operating consumer banking here. HSBC also closed down its retail banking unit in Korea back in 2013.

SC Bank Korea said it would place top priority on upgrading its expertise in wealth management targeting customers in the high-income bracket, thereby regaining investors’ confidence in the post-pandemic world.

“We are considering adopting specialized strategies in the area by launching a set of fresh financial products to attract more retail customers,” an official at the lender said.

SC will focus on developing diversified wealth management portfolios for customers, so they can cope with growing inflationary fears and increasing uncertainties surrounding monetary policies in major economies, according to the lender.

SC and Citi have been recognized for their global reputation in wealth management. Following Citi’s exit, SC aims to widen its customer base by attracting former Citi customers, and tackle uncertainties that it faces in the Korean market where foreign lenders are losing more and more ground.

The strength of SC Bank Korea’s wealth management business lies in its thorough risk management criteria set by its global headquarters.

SC Bank Korea sells fund products only when they pass a strict internal screening process gauging possible risks. This prevented the lender from being mired in the nationwide fund mis-selling scandal last year when most Korean commercial banks came under criticism for selling a series of risky funds without verifying their inherent risk factors. Those involved in the scandal are still grappling with the aftermath of the financial fiasco.

But the lender still leaves much to be desired in its earnings after reporting somewhat disappointing results for the third quarter. SC Bank Korea generated 79.5 billion won ($67 million) in net profit during the same period, declining slightly from the previous quarter.

The quarterly earnings decline is not a good sign, as its Korean rivals achieved unprecedented earnings growth during the same period. Most Korean lenders are widely expected to report record earnings growth this year on increased interest margins due to post-pandemic rate hikes.

But SC hopes to address such concerns by enhancing its brand identity as the sole overseas lender with strong expertise in risk management and retail banking.

SC Bank Korea said it would meet market demands and widen its foothold with a fresh business model by integrating its banking and securities operations at its sales office and selling more diverse financial products to customers through a unified sales channel.

“The integrated sales branch office will be launched sometime in the first quarter of 2022, and this is our new business model to strengthen our wealth management business,” the SC official said.

Those who visit the office will be able to sign up for customer-oriented financial products launched under SC’s risk management system, according to the lender.

Developing environmental, social and corporate governance (ESG) related financial products is another strategy for SC to hedge external risks amid a paradigm shift in the investment industry.

“Standard Chartered is strictly developing a set of self-evaluation frameworks on ESG, and plans to keep introducing a wide variety of ESG funds to the market after strictly reviewing the expertise of fund developers and their investment strategies and influence on the market,” the official said.