StanChart, Citibank in Korea to send $176 million in dividends to home countries

[Courtesy of Standard Chartered Bank Korea]

Two foreign banks operating in Korea, Standard Chartered Bank Korea and Citibank Korea, have decided to remit over 230 billion won ($176.2 million) to their home countries after reaping huge profits last year.

The banks have been criticized for holding a “money party” based on the increased interest income due to rate hikes. Despite financial authorities urging banks to exercise restraint in excessive dividend payouts, the foreign banks decided to increase their dividends.

According to sources on Friday, Standard Chartered Bank Korea held a board meeting on Thursday and approved a 160 billion won dividend payout. The dividend will be finalized at a regular general shareholder meeting on March 31.

Standard Chartered Bank Korea announced that it had a provisional net profit of 390.1 billion won last year, driven by an increase in interest income, more than tripling from 127.9 billion won in 2021. The bank paid dividends of 655 billion won in 2019, 49 billion won in 2020 and 80 billion won in 2021.

Citibank Korea also decided to pay a cash dividend of 73.2 billion won at a board meeting on Feb. 15. The bank will finalize the dividend payout at its shareholder meeting on March 30 and plans to pay the dividend in April.

Citibank Korea paid dividends of 65.2 billion won in 2019 and 46.5 billion won in 2020. However, it did not pay dividends in 2021 due to a loss due to retirement costs related to its withdrawal from consumer finance business.

The two banks plan to send virtually all of their dividends to their respective headquarters. Standard Chartered Bank Korea is 100 percent owned by Standard Chartered NEA Ltd., while Citibank Korea’s largest shareholder is Citibank Overseas Investment Corp., in which Citigroup in the U.S. owning 99.98 percent of the stake.

Last month, Korean financial authorities emphasized that banks maintain sufficient loss-absorption capacity while considering various stakeholders, although their autonomy of shareholder return policies should be guaranteed. This is particularly important given recent bank failures such as Silicon Valley Bank.

But Standard Chartered Bank Korea and Citibank Korea say they made the dividend decision while maintaining their capital strength.

Standard Chartered Bank Korea said the size of the dividend was decided based on the results of the 2022 accounting settlement from a normal management perspective and even after its dividend payout, its BIS capital adequacy ratio and Tier 1 ratio will remain at 17.83 percent and 14.73 percent, respectively, which meet the capital regulation requirements of domestic and foreign supervisory authorities.

Citibank Korea said it is maintaining the highest level of capital adequacy in Korea by continuously increasing its capital ratio, adding that it considered sufficient loan loss provisions and capital reserves against the maximum level of potential losses that could occur in crisis situations when deciding on its dividend payout.