Foreign Banks Acquisition Strategy and the Business Approach of Domestic Bank: A Case of Standard Chartered Bank

Abstract

The purpose of this study is to investigate the process of foreign bank’s acquisition strategies of domestic bank by studying Standard Chartered bank as acquirer in Korea. The methodology of this study carries out in-depth analysis of the M&A backgrounds in bank industry, objectives and strategies of banks subject to analysis as a case study and presents performance, problems and implications for M&A strategies. Contrary to original expectation, as well as the low profitability for 10 years after its acquisition of First Bank, various management problems occurred, which prompted the Korean market to doubt whether the bank would indeed run a long-term and stable operation. Concerns were raised that Standard Chartered bank would follow the path of past investment funds which withdrew from the market after enjoying a short-term profit through business downsizing and encashment strategies such as high dividends, asset sales, and excessive commissions instead of continuous growth and reinvestment in the country. This study examines business activities of Standard Chartered bank in Korea for the past decade to deduce political implications useful for policymakers seeking rational policies against any other inflow of foreign capital.