Foreign investors rake in record $10b in dividends

Korean companies paid a record-high $10 billion in dividends to foreign shareholders last year, the central bank said Monday.

The Bank of Korea said a total of $10.28 billion was paid to nonresident investors in 2014, exceeding the previous record of $7 billion in 2006. This is the highest figure since 1980, when the nation’s financial authorities began keeping track of foreign dividend payouts, a move to monitor the outflow of national wealth.

“The Korean companies’ (earnings to) foreign dividend ratio has been on the rise,” a BOK official said, pointing to the government-backed push to create a more investor-friendly environment and invigorate foreign investment.

Private financial researchers seconded the central bank’s data on the rising foreign dividends.

Chaebul.com, an online conglomerate tracker, reported that the country’s big-four conglomerates, Samsung Group, Hyundai Motor Group, SK Group and LG Group, paid a combined $3.8 trillion won to foreign shareholders last year, up 34.7 percent from a year ago. This amounts to 49.3 percent of their total dividend payouts throughout the year.

The foreign dividend ratio jumped among financial companies, in which foreigners hold about 70 percent of the shares.

The top six financial groups, including Shinhan Financial, KB Financial and Hana Financial, paid about 3 trillion won ($2.7 billion) in dividends between 2010 and 2013.

The Park Geun-hye administration has sanctioned a series of deregulatory moves to create the groundwork for a creative economy, a move that counters the regulators’ emphasis on economic stability since the 1997 Asian financial crisis and the 2007-08 global financial crisis.

The rising dividends to foreign investors has been a bone of contention among financial experts. In the wake of Lone Star’s “grab and run” fiasco, the financial regulator has been trying to cut the outflow of national wealth abroad ― largely by discouraging foreign dividend payouts.

Back in 2003, foreign-invested Lone Star bought out Korea Exchange Bank for 1.4 billion won, and claimed large dividends every year. Nine years later, it sold KEB to Hana Bank for a profit of 4.7 trillion won, and left the country.

By Chung Joo-won (joowonc@heraldcorp.com)