Standard may take $1bn hit on Korean division

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Standard Chartered may take a $1 billion‑plus (£658 million) hit on its Korean business, analysts have warned ahead of an internal assessment by the London-listed, Asia-centric bank.

Standard, one of the few UK banks not ordered by the Prudential Regulation Authority to beef up its capital cushions, flagged up a more radical shake-up of its business in Korea.

The group’s problems with its Korean First Bank subsidiary, which it bought for $3.3bn in 2005, have included a weaker financial performance than expected, a staff dispute, rising bad debts and regulatory pressures.

Standard made an operating profit of $514m (£338m) in Korea in 2012 on income of $1.85bn. But the bank has said bad debts have risen there this year, with Korea accounting for 40 per cent of sour consumer loans in the first trading half.

Details on the provisions related to the Korean arm will be made alongside Standard’s interim results due in early August, the group said.

Richard Meddings, finance director, told analysts yesterday that Standard remained committed to Korea.