Kathreb

Join the Financial Hub of Asia! (Non-Koreans need not apply)

The doyens of the Financial Supervisory Commission have apparently decided that to help Korea realise their long-held but poorly defined dream of becoming an "Asian Financial Hub" (notice the bit that says, "We need to... improve our infrastructure and brand image to attract more expatriates who are key in any regional financial hub.") they should control foreign bank directors. This would include welcoming moves such as, imposing residency requirements on foreign directors of domestic banks, and limiting the number of foreigners allowed on boards.

The argument for this,

Foreign investors now own about 60 per cent of the shares in domestic banks and Mr Yoon said that while South Korea could learn from their international experience, foreign interests needed to adapt to the Korean way of doing business.

“There is a concern that foreign-dominated boards of directors of domestic banks may lack the necessary local expertise, knowledge and understanding to perform effectively,” Mr Yoon [Yoon Jeung-hyun head of the FSC] said in his first interview since becoming head of the regulatory bodies in August. The FSC advises the government on policy, while the FSS supervises and investigates financial institutions.

“As is the case elsewhere, there are uniquely local regulatory and business characteristics and considerations to banking that must be respected by foreign investors,” he said.

In the context of how well Korean bank managers handled the financial system in the lead up the to 1997 Asian financial crisis makes this comment all the more laughable. The other arguments of anti-foreign sentiment along with the need for local knowledge are simply ruses. The real information is in the last line of the article: "This is seen as a move to ensure Woori Bank will remain in Korean hands when privatised next year." Being an "Asian Financial Hub" is apparently only acceptable if it is a "Korean Financial Hub" where the local regulatory environment is more important than the regional or global arena.

Permalink Post a Comment