Dutch bank ABN Amro is set to join ING Group and J. P Morgan Chase in seeking to capitalise on South Korea's $230 billion asset management market, the head of ABN's South Korean operations told Reuters on August 22.
South Korea's asset management sector is seen as the next promising market for foreign investors, with new corporate pension plans outsourcing a portion of retirement savings to private fund managers.
J. P Morgan Chase and ING Group are awaiting regulatory licences to open fund management businesses in the country, an official at the Financial Supervisory Service said.
The sector's three-fold annual rise in pre-tax incomes for the April-June quarter and the moves by ABN's rivals have piqued ABN Amro's interest, and it expects to join them soon in South Korea to tap into a market forecast to grow at a double-digit rate in the coming years.
"New sectors we have wanted to bring in are asset management, private banking and infrastructure capital businesses," Yoon Kyung-hee, the country head for ABN Amro in South Korea, said in an interview. "Among them, asset management will be the first."
ABN, which has 180 employees for wholesale banking and brokerage operations in Asia's third-largest economy, opened an office for fund management operations in the country last December and plans to develop it into a unit, which requires another licence. It has not yet applied for the licence.
Kang Myoun-wook, the chief of ABN Amro's asset management division, said the timing and method of transforming the office-level operation into a unit have yet to be decided.
Twelve global asset managers, including Fidelity, Prudential and Schroder, are operating in South Korea in the form of either wholly-owned units or joint ventures with local partners, competing with 36 domestic players.
The number should rise as the fund management market is expected to grow at least 10 percent in the following years, with retail investors re-allocating assets into stocks and a lowered initial capital requirement of 10 billion won ($10.45 million), Kang said.
However, ABN Amro may be arriving late, with few potential partners left after top domestic asset managers have teamed up with foreign peers in joint ventures.
The biggest bank in the Netherlands had been one of global investment banks in talks with Hana Financial Group to buy a majority stake in Hana's asset management arm.
But Swiss investment bank UBS AG and Hana, the country's No 4 banking group, ended up striking a deal in July worth up to $190 million.
In addition, Credit Suisse bought 30 percent of the asset management arm of third-ranked Woori Financial Group for $56 million in March. In contrast, ING is expected to go it alone, using its expertise developed through its 20 percent stake in the asset management arm of the country's top lender, Kookmin Bank. ING is also the fourth-largest life insurer in South Korea, which provides a good sales channel.