beyondbrics

Banking is getting personal again in Korea. On Tuesday beyondbrics spotted a series of rather stylish cartoons on the union tent (pictured) outside Standard Chartered’s First Bank in Seoul. Even by the pugnacious standards of Korean unions, this is Rabelaisian stuff.

Is this an isolated case or indicative of a change in mood for foreign investors in Korea’s finance sector?

In one cartoon (see below), Richard Hill, the British CEO of the bank, is burping after gorging himself on the company’s cash. In another, he is a Roman charioteer, whipping his staff to produce more profit.

Most significantly, the pantomime-villain CEO is planning to fly away with his bags of loot.

Hill has made far greater efforts to go native than most foreign CEOs here and has invested a lot of time into learning Korean. But that has proved little defence in the face of a feisty union.

All this has to be seen in context. Such calculated theatrics are all part of the game in Korea. StanChart is locked in discussions with the union over introducing performance related pay. No holds are barred. The union is threatening to strike next week. StanChart has weathered flamboyant protests from its union ever since buying into Korea in 2005, in one of the country’s biggest foreign direct investments.

But even despite these cultural caveats, the mood for foreign direct investors in Korean finance is definitely getting more unpleasant. Senior Korean officials and bankers have tried to persuade beyondbrics that StanChart will shortly be pulling out of Korea.

StanChart retorts this is rubbish. Hill and StanChart’s London-based CEO, Peter Sands, have both insisted that Korea is a permanent investment. It would be astonishing if the lender quit now after so long parading its “Here for good” slogan. The Korea operation accounts for six per cent of global profits before tax.

Still, there is a serious attempt – mainly conducted through the local press – to tarnish StanChart’s reputation. At the heart of the argument is the suggestion (as shown in the cartoon) that StanChart is going to jet off with its profits to its homebase. StanChart insists it is not that kind of bank and does not regard London or Hong Kong as a homebase it can flee to.

Korea is a tough place for foreign direct investment. It is telling that it receives about as much FDI as Cyprus. Last year, StanChart brought a former Korean prime minister, Han Seung-soo, onto the board for a $267,000 pay packet but he is not helping them win the propaganda war.

South Korean officials keep saying they are trying to revitalise the banking sector and are open to foreign investment. Still, Seoul’s current attempt to sell the biggest state bank, Woori, is going nowhere.

Seeing the fortunes of StanChart, foreign investors don’t want to meet the same fate. They could even end up as cartoon villains.

Related reading:
Investing in South Korea, FT Special Report