Financial Services Commission headquarters at the Government complex Seoul (Yonhap)
A ruling party lawmaker recently filed a bill calling for banks to receive the financial authorities’ permission for partially shutting down their business here, the National Assembly’s online bill information system showed Tuesday.
Rep. Min Byoung-dug of the Democratic Party of Korea’s move follows Citibank Korea’s decision in October last year to pull out its retail banking business in phases, after failing to reach a deal with potential buyers. Citigroup in April 2021 announced its exit from 13 global markets, including Korea.
Despite divided opinions surrounding the matter, the policymaking Financial Services Commission confirmed last year Citibank Korea’s plans to gradually phase out its consumer banking operations are not subject to the regulator’s authorization.
Under Article 55 of the nation’s Banking Act, banks must receive the FSC‘s permission to carry out mergers and acquisitions or a dissolution or closure of business. The article doesn’t include cases where banks decide to “partially dissolve or close” their businesses.
“From a customer’s perspective, it is right for banks to receive permission to partially shut down their businesses,” Min said in the filing.
The FSC had hinted a possible revision of the Article 55 last year when FSC Chairman Koh Seung-beom said, “While Citibank Korea’s decision may not be a subject of our permission, we must review whether an overhaul is necessary for banks seeking to change its asset portfolio or target of business.” He added that the issue has risen as a key topic of discussion because such a change in a banks’ business strategy can affect its customers’ finance and credit.
Some 2,000 out of about 2,300 employees in Citibank Korea’s retail business have been arranged to leave the company under a voluntary retirement program tied to the phase out of the consumer banking division, a company official said earlier.
Citigroup opened its first branch in South Korea in 1967 and launched Citibank Korea in 2004 after acquiring KorAm Bank.
By Jung Min-kyung (email@example.com