South Korea: Weakening profitability cited as reason for foreign FIs withdrawing from market
Source: Asia Insurance Review | Jun 2021
Falling profits and rising costs, as well as strict regulations, have been cited as the main reasons for foreign financial institutions, including insurers and banks, leaving South Korea.
High corporate tax is another reason, said Yonsei University economics professor Sung Tae-yoon. He said that the maximum corporate tax rate in South Korea is too high compared to that in other Asian countries such as Singapore.
In recent years, several foreign insurance companies have exited or are planning to exit the mostly stagnant Korean insurance market.
In 2020, US-based firm Prudential Financial sold its Korean business to KB Financial Group. Prudential’s departure marks the fourth foreign insurance firm pulling out of the country following ING Group, Allianz Group and Prudential PCA of the UK.
According to data published by Financial Hub Korea which is under the Financial Supervisory Service, the number of foreign banks’ branches and offices has been falling every year. As of end-December last year, the figure dropped further to 54, from 60 four years ago. A