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Goldman Sachs To Shutter South Korea Asset Manager As Business Can't Hit Its Stride

Tom Burroughes

14 November 2012

Goldman Sachs is pulling out of the South Korean asset management business just five years after entering the highly competitive market, the US-headquartered firm confirmed to this publication today, saying the business had not lived up to is expectations. 

Media reports said that the firm's unit in South Korea manages about $4 billion in assets and has about 40 staff. Goldman will try to absorb them in other parts of the company.

"Our expectations for the local Korean asset management business have not been met," a spokesperson for the US firm told this publication in an emailed statement. 

South Korea tends to be is dominated by domestic institutions; thin margins have made it hard for businesses that don’t have large economies of scale to compete.

Goldman Sachs will continue to invest in South Korea through its offshore funds management unit, another spokesperson for the firm, in Hong Kong, is quoted as having said by Reuters. 

The firm entered the South Korean market by acquiring a joint venture between Macquarie Group and local firm IMM Investment Management.

In its results statement on 17 October, Goldman Sachs reported net revenues of $8.35 billion and net earnings of $1.51 billion for the third quarter, compared with $1.09 billion and $962 million for the previous quarter, respectively. The firm had total assets under management of $856 billion at 30 September, up from $836 billion at the end of June and up from $821 billion a year ago. In the latest quarter, there were total net outflows of $1 billion; within that mix, there were $3 billion in outflows from alternative assets, $1 billion of outflows from equities, but $5 billion of inflows to fixed income.