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| Ajay Kanwal |
New Standard Chartered (SC) Korea CEO Ajay Kanwal faces a daunting task.
Moving from Taiwan two weeks ago, Kanwal is learning the ropes. But, he cannot afford to take his time because SC Korea is reeling from falling profits as well as investigations by financial regulators and the tax office.
The group's net profit last year plunged 37 percent from a year earlier to 90.3 billion won. Most of its competitors also saw their margins fall last year, but SC Korea's performance was the worst.
Its key subsidiary, SC Bank Korea, suffered a 40 percent decline in net earnings to 116.9 billion won. Kanwal is concurrently serving as the banking unit's CEO.
The lender's return-on-assets and return-on-equity ratios, key indicators of profitability and financial soundness, also plunged by 0.34 percentage points to 0.26 percent and by 6.03 percentage points to 3.53 percent, respectively.
His predecessor, Richard Hill, closed branches and cut jobs through early retirement programs.
SC also continued to sell its assets, triggering questions about whether it was really committed to the Korean market.
The firm's asset disposal and high dividend payments to its parent group in London have been major concerns for regulators as well as lawmakers here.
There have been rumors that SC may put the Korean unit up for sale as part of a readjustment of its global operations. About 90 percent of its profits come from its businesses in Asia, Africa and the Middle East.
SC Korea officials have denied that speculation.
The bank and its former CEO Hill may be sanctioned by regulators concerning a recent consumer data theft case, in which the personal information of more than 100,000 SC customers was stolen and delivered to loan brokers. The data could be used for financial scams.
The bank is also being investigated by the Financial Supervisory Service over suspicions that it engaged in accounting fraud while conducting derivatives and interest rate swap deals with SC's subsidiary in Hong Kong.
An FSS official earlier told The Korea Times that the amount of these questionable transactions may surpass 1.2 trillion won ($1.13 billion).
This probe could lead to an audit by the National Tax Service.
Kanwal will talk to the Korean media on these issues on April 24.
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