South Korea

Corporate Treasury & Banking in South Korea & Taiwan

Report date: 
22 Sep 2026

Commentary

After our call, it seemed as if this summary would be unusually brief. South Korea and Taiwan are both prosperous, business friendly, economies with strong currencies. There are no official exchange controls, and most, if not all, international banks are well established, and can provide most services. So – what complications can there be?

On one level, the answer is everything is fine. Foreign owned businesses can, and do, operate successfully in both markets. Imports can be paid for, and profits repatriated, albeit with a withholding tax penalty. Intercompany loans are permitted, with some bureaucracy.

But it turns out both markets present challenges. These typically result in solutions which are less than optimal. However, things work, and, as these markets, while important, are significantly smaller than the regional giants of the PRC and Japan, peers often decide to leave well alone. There is a list of items peers would like to address – but none is top priority. 

This situation is due, in part, to the history of both markets. Both are on the periphery of China and have, over the centuries, been under varying degrees of Chinese control. Today, Korea is well established as a separate state: as we all know, this is still very much an issue between China and Taiwan. Both markets were Japanese colonies between 1895 and 1945: unlike Korea, Taiwan has a largely positive memory of this experience. In both cases, the Japanese laid the foundations of today’s economies. Finally, both emerged in 1945 in poverty: the subsequent industrialisation and economic development relied, in part, on protective measures and exchange controls. While these restrictions have greatly eased, many of the frustrations encountered by our peers are the legacy of this system.

So, what does the landscape look like?

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Topics covered in this report: 
Bank Relationships, Hedging FX, FX, Cash Pooling - cross border, Trapped cash, Cash - deposits, intercompany netting, Intercompany loans, PromissoryNotes (Korea), Cash Pooling - domestic, Cash Repatriation, PSP, Dividends
Service providers discussed in this report: 
JP Morgan, BNP Paribas, Bank of America, Citi, Standard Chartered, MUFG, Bank Mendes Gans, ING, HSBC, Deutsche Bank, Cathay Bank, Ayden, Matchbox

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FX & Treasury in South Korea

Report date: 
25 Nov 2022

Commentary

South Korea is a market which it is notoriously difficult for foreigners to penetrate: this applies as much to banks as it does to industrial companies. The culture is fiercely patriotic, and the vitality of South Korean industry means that most products are available from local companies, who are often world leaders.

The result is a situation where, despite the size of the economy – in 2021, it had the world’s 10th largest GDP, ahead of Brazil and Russia – it tends not to be a major market for most non South Korean MNCs. This was reflected in the call, where the country is complicated, and not a major focus for most participants. The situation is further complicated by language – English language skills can be rare amongst local staff and banks – and by a significant reluctance on the part of staff and customers to work with foreign banks. When you add in a series of specific, and very strong, local customs and processes, such as customers who often insist on making payments in person, you have a challenging situation.

Despite all of this, our participants manage to work successfully. Cross border cash pooling is possible, using the Consolidated Management of Funds (CMF) structure, which has to be approved by the Bank of Korea. The approval process is burdensome and requires a lot of work – and it all has to be done in Korean. But it works. 

Equally, dividends can be paid – but again, there is bureaucracy. Currency trades must be settled onshore, so many people find it easier to use the offshore NDF market, which is fairly liquid. Intercompany netting has to be gross in gross out – and the won can be remitted offshore. Cross border intercompany loans

 

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Topics covered in this report: 
Cash Pooling - cross border, Hedging FX, Bank Relationships, Collections - domestic, CMF, Netting, Dividends, Virtual accounts
Service providers discussed in this report: 
HSBC, JP Morgan, Standard Chartered, Bank of America, Citi

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Regional Bank Relationships in Asia

Report date: 
2 Jun 2022

Commentary

The way treasurers manage banking relations provides a key insight into how they approach their job. This session was no exception – and we had the additional benefit of input from senior banker in Asia and Advisory Board member John Laurens, who shared his view from the other side of the fence.

  • Nearly everyone had the same goal: try to get the most efficient banking structure.
  • This nearly always involves a general preference for dealing with core international relationship banks over having many local relationships
  • However, one participant commented that local banks in Asia often have excellent technology and services – but it is difficult to get HQ to agree to go with them
  • In any case, there are many situations where local banks are still required, to support tax payments or local payment systems. China, India, Korea and Japan were the countries where this was most frequent.
  • In awarding business to banks, most companies tend to give a preference to the institutions who participate in credit facilities. Exceptions were made when justified by a specific service, but this could become an issue when credit needs increased.
  • Several participants have either recently restructured their banking relationships, or are currently doing so. Comments:
    • It is very important to get the local team on board. They will usually accept the outcome and help if they own the decision, and can see clear benefits.
    • The RFP process is useful, but it is important to carefully check the responses. One participant found that banks often tried to sell capabilities they did not yet have – it is important to focus on what they can deliver today. They also found it was beneficial to use...please sign in to continue reading
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Topics covered in this report: 
ASEAN, Bank Relationships, RFPs
Service providers discussed in this report: 
Citi, JP Morgan, HSBC, Deutsche Bank, Bank of America, Standard Chartered, ICBC, DBS, Bank of China

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