Private bankers out to lure wealthy expats

Han Seung-woo, a private banker at KB Kookmin Bank, helps three wealthy expatriates manage their accounts in Korea. Busy with travel, these clients leave it to Han to manage their money when they are away.

For the past three years, Han has been working at the bank’s private banking center in Seoul’s affluent southern district of Gangnam. During that time, although he has yet to see a steep rise in the number of foreign customers, there has been a steady stream of inquiries from expats. 

“Expat clients deposit about 1 billion won ($852,000) to 1.5 billion won, on average, at our center. In some cases, I did see a 9-10 billion won deposit,” Han told The Korea Herald.

“Our job is to help clients diversify their investment portfolios to include insurance, gold bars and real estate. We also get many questions about taxation issues.”

Han is among a new class of private bankers who cater to high-income expats living or doing business in districts in Seoul such as Gwanghwamun, Myeong-dong, Gangnam and Hannam-dong. Songdo in Incheon and Jeju Island are also key districts for affluent expats.

Squeezed by narrowing interest margins accompanying an all-time low benchmark interest rate, Korean lenders are expanding their expat services to those stretching beyond remittance or foreign exchange.

CEOs, Chinese investors as main targets

Shinhan Financial Group, the nation’s largest banking group by assets, recently opened Shinhan International Financial Center in Gwanghwamun on Jan. 29 to tap into the burgeoning expat clientele.

According to Shinhan, the number of non-Koreans holding an active account at the bank jumped to 550,000 in 2015 from 390,000 in 2013. About 1.7 million expats live in Korea.

At Shinhan International Financial Center, three bilingual private bankers fluent in English, Chinese and Japanese, provide investment advice and asset management services.

The center’s main target are expat CEOs who are interested in tax exemptions. In terms of nationality, the bank is hoping to attract more Chinese clients.

“Recently, we landed an asset management deal of a surprising amount with a Chinese CEO of a foreign-invested company,” said Lee Jung-hyun, a private banker and retail banking manager at the Shinhan IFC.

He declined to reveal the exact amount, citing privacy issues.

“I wouldn’t say private banking for expats is thriving because things are still in the initial stages,” Lee added. “We will keep working to get more customers.”

Another bank, KEB-Hana Bank, opened its “International PB Center” in Yeoksam-dong in June last year, where six Chinese-speaking private bankers provide asset management services.

KEB-Hana bankers noted that many Chinese people are inquiring about investing in real estate on Jejudo Island. The bank also works with Wonkwang University Hospital and Jasaeng Hospital of Korean Medicine to offer easier payment service for foreign customers in medical tourism.

Skepticism persists

In contrast to the eagerness shown by local banks, the international banks operating in Korea -- such as Citi and Standard Chartered -- are far from positive about just how big the expat business can be.

“The market is simply not big enough, not to mention there is no real reason for expats to choose the local banks,” said an official at an international bank. “Many are banking with us for our global network and brand power.”

The local banking industry is exhibiting its own share of skepticism.

“It costs us to make financial products and proposals in foreign languages, while the investment returns may not be as big,” a financial industry official said.

Sohn Sang-ho, senior research fellow at the Korea Institute of Finance, said the demand for expats’ asset management has been on the rise, but it is unlikely to grow into a market of meaningful size.

“Private banking services for expats will be confined to managing spare money, given that local banks’ asset management skills are not yet as advanced as foreign firms,” he said.

“However, one positive aspect is that local banks will be able to earn some know-how in managing assets of foreign-invested companies.”

By Kim Yoon-mi (yoonmi@heraldcorp.com)