Last checked at 
By Lawrence White
HONG KONG, Aug 7 (Reuters) - Standard Chartered Plc said it could sell two South Korean consumer finance units aftertaking a $1 billion writedown on its business there,underscoring the diminished potential of what the Asia-focusedbank calls its most difficult market.
The bank has been hit by regulatory changes that have forcedthe sector to forgive loans by highly indebted individuals, aslowing economy and high labour costs that have provenfiendishly tricky to alter.
But it is not planning a broad-based exit, betting thatcross-border financing opportunities provided by leadingcompanies like Samsung Electronics Co Ltd will makeriding out the current flurry of ill winds worthwhile.
When StanChart acquired Korea First Bank in 2005the industry saw returns on equity of 18 percent, but they havenow fallen to 4 percent.
"It's going through a lean patch that wasn't the case whenwe bought it, and we hope it won't stay the case forever," AsiaChief Executive Jaspal Bindra told Reuters in an interview.
"We have 380 outlets in Korea, we are very committed. As the12th largest economy in the world and 6th largest exporter itplays entirely to our strengths."
He said the two units that are under consideration for salemake up less than three percent of the firm's business in SouthKorea. The units, SC Savings Bank and SC Capital, were mainlyused to fund a mortgage book that has since been significantlyreduced.
Domestic media has said SC Capital has some 1.5 trillion won($1.3 billion) in assets while SC Savings Bank has 550 billionwon in assets.
While StanChart is persevering with Korean consumer banking,rival HSBC has given up, saying this month it wouldclose its branch network in the country leaving only the globalbanking and markets unit that serves corporate clients.
That leaves Citigroup Inc, which bought KorAm Bank in2004, as StanChart's only foreign rival with a nationwideconsumer presence in Korea.
StanChart's $1 billion goodwill writedown, largely due thegovernment's debt rehabilitation scheme, dragged down the bank'sfirst-half profits 16 percent.
High labour costs continue to remain an issue in the heavilyunionised country where other global firms like General MotorsCo are often at odds with labour unions. In 2011,StanChart suffered a month-long strike after trying to introduceperformance-related pay.
Outside South Korea, Bindra said that while China saw themost severe pressure on margins of any of the bank's markets,the country's economic slowdown should not result in a hardlanding and may actually yield business opportunities.
The domestic slowdown is forcing state-owned companies toexpand internationally which plays to the bank's strengths, hesaid.
China is now the biggest contributor to the bank's networkincome, a measure of revenue generation from companies outsidetheir home markets, at $353 million in the first half of theyear.
