Foreign financial firms here saw sharp declines in both profit and market share this year, with some packing up to leave the country blaming double regulation and bias in addition to domestic banks’ dominance.

Third-quarter net profits of Standard Chartered Bank Korea and Citibank plummeted 64 percent to 40.8 billion won ($37.7 million) and 73.3 percent to 37.1 billion won, respectively, compared to last year.

Goldman Sachs Asset Management decided last month to shut down its Seoul office five years after starting business here. Dutch insurance giant ING Group and U.K.’s Aviva Group are set to sell stakes in ING Life Korea and Woori Aviva Life Insurance. HSBC is considering closing its retail banking business in Korea.

There were rumors that SC Bank and Fidelity Asset Management were also pulling out, which the companies strongly denied.

“Global financial companies are downsizing business in slow markets as they adjust their portfolios amid the global economic slump,” said an analyst at a foreign investment bank.

Among the reasons foreign financial companies cited for why they are having trouble settling down are double regulation by the Korean authorities and their home governments, strong sales networks of domestic banks and bias against foreign firms.

“It is not easy to compete against Korean banks’ top-notch Internet banking systems while complying with both Korean rules and the regulations of the home country,” an official at a foreign bank said.

Another official at a non-Korean bank pointed to the different market perceptions of asset sales by Korean and foreign financial firms.

“If a Korean bank plans to sell its assets, the market says it is for greater efficiency in business, but if a foreign financial firm talks about selling assets, speculation rises that it is seeking to ‘eat and run,’” he said, referring to how major-stake sales by foreign funds got bad press in the past.

“This kind of bias makes things harder.”

The market shares of all foreign banks, insurance companies and asset management firms dropped this year.

SC Bank Korea’s market share in terms of loans shed 0.5 percentage point in a year from 3.6 percent in June last year. Citibank lost 0.1 percentage point to 2.2 percent in the same period.

The combined market share of 11 foreign life insurance companies in terms of premiums paid in the first three months of this year fell to 18.6 percent. Their combined market share stood around 21-23 percent from 2007 through 2010, but slipped to 20.7 percent last year and sank into the 10-percent range early this year.

The combined market share of 15 foreign non-life insurers also shrank from 2.2 percent last year to 2 percent in the first quarter of this year.

Twenty-three asset management firms in which foreign-held stakes take up over 50 percent accounted for 15.9 percent of the domestic market late last month, down from 17.1 percent a year ago.

Their net earnings plunged, with nine of the 23 foreign asset management firms posting losses as of June.

By Kim So-hyun (sophie@heraldcorp.com)