Foreign Asset Management Firms Deeply Troubled by Citi Bank Withdrawal

Concerns Over Overseas Fund Sales Decline by Major Distributors

Korea Citibank announced its withdrawal from the domestic consumer finance sector. The photo shows the Korea Citibank headquarters in Jongno-gu, Seoul, on the 19th. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Minji Lee] As Citibank Korea decides to exit the retail banking sector, foreign asset management firms operating overseas funds are growing increasingly concerned. In a sluggish public fund market, the disappearance of Citibank, which facilitated the sales of overseas funds for foreign asset managers, could lead to difficulties in fund sales.

According to the Korea Financial Investment Association on the 27th, as of the end of February, ranking asset managers by sales balance through Citibank shows Fidelity Asset Management (493.5 billion KRW), BlackRock Asset Management (181.7 billion KRW), AllianceBernstein Asset Management (176.1 billion KRW), and Schroder Investment Management (128.5 billion KRW) in order. Additionally, Eastspring Asset Management (88.3 billion KRW) and Baring Asset Management (32 billion KRW) supplied funds through Citibank. The total balance of funds set through Citibank amounts to 1.7979 trillion KRW.

Unlike domestic asset managers who own affiliated sales channels such as banks or securities firms, foreign asset managers primarily rely on foreign banks like Citibank or Standard Chartered Bank Korea as their main sales channels. Given the domestic market environment where it is difficult to penetrate fund sales networks without affiliated sales companies, Citibank's withdrawal from retail banking effectively cuts off a vital channel for foreign asset managers to raise fund capital.

For Fidelity Asset Management, 493.5 billion KRW (15%) out of the total fund balance of 3.191 trillion KRW came through Citibank, making it their largest sales channel. Schroder Investment Management had 128.5 billion KRW (14%) out of 873.5 billion KRW, and AllianceBernstein (AB) Asset Management had 176.1 billion KRW (10%) out of 1.7476 trillion KRW through Citibank. BlackRock Asset Management, which withdrew from public fund sales in the domestic market last month and sold its retail business targeting individual investors to DGB Asset Management, had 181.7 billion KRW (18%) out of 961.8 billion KRW flowing through Citibank.

An industry insider said, "Foreign banks have been effective in selling overseas products, so foreign asset managers have a high proportion of their fund balances through them. Asset managers with a large share through Citibank are reportedly struggling to find new sales channels to launch new products."

Among foreign asset management firms, some are choosing to exit the business as public fund sales become more difficult in the domestic market. Starting with Goldman Sachs Asset Management in 2012, JP Morgan Asset Management and Macquarie Investment Management have withdrawn from the Korean market, and recently Franklin Templeton Investment Management is also considering selling its retail business. Among foreign asset managers, only Eastspring Asset Management and Baring Asset Management maintain Korean operations.

This content was produced with the assistance of AI translation services.