Woori Bank and Shinhan Bank, which competed for the 51 trillion won Seoul city treasury bid, are set to face off again in the bidding for district treasuries in Seoul. Following Shinhan Bank's successful retention of the city treasury, attention is focused on whether Woori Bank, which currently operates the most district treasuries at 14, can maintain or regain its position.
According to financial industry sources and the Ministry of the Interior and Safety on May 22, the contracts for district treasuries in 25 Seoul districts will expire by the end of this year. These districts plan to sequentially hold bids for selecting district treasury banks in the second half of the year. The total operating funds for the 25 district treasuries in Seoul amount to approximately 16 trillion won, a significant figure when compared to Incheon’s budget of about 15 trillion won.
Currently, the distribution of district treasuries in Seoul is as follows: Woori Bank operates 14 (Gangdong, Gangseo, Gwanak, Geumcheon, Mapo, Seodaemun, Seongbuk, Songpa, Yangcheon, Yongsan, Yeongdeungpo, Jongno, Jung, and Jungnang), Shinhan Bank has 6 (Gangnam, Gangbuk, Guro, Seongdong, Seocho, and Eunpyeong), and KB Bank operates 5 (Gwangjin, Nowon, Dobong, Dongdaemun, and Dongjak).
Industry analysts expect a two-way competition between Shinhan Bank and Woori Bank in the upcoming district treasury bids. In the previous Seoul city treasury bid, both banks applied for the top two treasury positions, with Shinhan Bank receiving the highest score and being selected as the operating institution.
After losing the city treasury bid, Woori Bank plans to launch a full-scale effort to secure additional district treasuries ahead of the upcoming bids.
Woori Bank has operated the Seoul city treasury for over 100 years and has effectively monopolized the district treasury operations. However, since Shinhan Bank acquired the operating rights for the Yongsan District's first treasury in 2015, it has increased its number of district treasuries to 6, breaking Woori Bank's monopoly. In response, Woori Bank is currently reviewing its bidding strategy through an internal task force.
Shinhan Bank aims to leverage its momentum from retaining the city treasury to secure more district treasuries. Given that system stability and operational experience are crucial in treasury operations, its use of the same collection and IT systems as the city treasury may provide an advantage.
Some analysts suggest that KB Bank's potential participation in the upcoming bids, having previously challenged for the second treasury, should also be monitored. KB Bank has been steadily expanding its institutional sales organization based on solid performance and has secured five district treasuries in Seoul, broadening its base.
However, significant costs related to interest rates and contributions are expected for banks participating in the district treasury bids. In the past, banks reportedly proposed contributions of around 10 billion won for each treasury.
Interest rates for loans and deposits will also be a variable in the competition. According to the Ministry of the Interior and Safety, the average interest rate for 12-month or longer time deposits across the 25 district treasuries in Seoul is approximately 3.42%. The highest rates are currently applied in Seodaemun, Seongbuk, Yongsan, and Jung-gu at 3.95%. As competition intensifies, banks will need to offer higher rates, which could ultimately become a burden.
A financial industry official stated, "District treasuries are a business that may incur low profitability or losses due to the burden of contributions and interest rate competition, but they are essential for future challenges in city treasury selections. As the bidding will begin after the local elections, the strategic planning of each bank will become increasingly important."
According to financial industry sources and the Ministry of the Interior and Safety on May 22, the contracts for district treasuries in 25 Seoul districts will expire by the end of this year. These districts plan to sequentially hold bids for selecting district treasury banks in the second half of the year. The total operating funds for the 25 district treasuries in Seoul amount to approximately 16 trillion won, a significant figure when compared to Incheon’s budget of about 15 trillion won.
Currently, the distribution of district treasuries in Seoul is as follows: Woori Bank operates 14 (Gangdong, Gangseo, Gwanak, Geumcheon, Mapo, Seodaemun, Seongbuk, Songpa, Yangcheon, Yongsan, Yeongdeungpo, Jongno, Jung, and Jungnang), Shinhan Bank has 6 (Gangnam, Gangbuk, Guro, Seongdong, Seocho, and Eunpyeong), and KB Bank operates 5 (Gwangjin, Nowon, Dobong, Dongdaemun, and Dongjak).
Industry analysts expect a two-way competition between Shinhan Bank and Woori Bank in the upcoming district treasury bids. In the previous Seoul city treasury bid, both banks applied for the top two treasury positions, with Shinhan Bank receiving the highest score and being selected as the operating institution.
After losing the city treasury bid, Woori Bank plans to launch a full-scale effort to secure additional district treasuries ahead of the upcoming bids.
Woori Bank has operated the Seoul city treasury for over 100 years and has effectively monopolized the district treasury operations. However, since Shinhan Bank acquired the operating rights for the Yongsan District's first treasury in 2015, it has increased its number of district treasuries to 6, breaking Woori Bank's monopoly. In response, Woori Bank is currently reviewing its bidding strategy through an internal task force.
Shinhan Bank aims to leverage its momentum from retaining the city treasury to secure more district treasuries. Given that system stability and operational experience are crucial in treasury operations, its use of the same collection and IT systems as the city treasury may provide an advantage.
Some analysts suggest that KB Bank's potential participation in the upcoming bids, having previously challenged for the second treasury, should also be monitored. KB Bank has been steadily expanding its institutional sales organization based on solid performance and has secured five district treasuries in Seoul, broadening its base.
However, significant costs related to interest rates and contributions are expected for banks participating in the district treasury bids. In the past, banks reportedly proposed contributions of around 10 billion won for each treasury.
Interest rates for loans and deposits will also be a variable in the competition. According to the Ministry of the Interior and Safety, the average interest rate for 12-month or longer time deposits across the 25 district treasuries in Seoul is approximately 3.42%. The highest rates are currently applied in Seodaemun, Seongbuk, Yongsan, and Jung-gu at 3.95%. As competition intensifies, banks will need to offer higher rates, which could ultimately become a burden.
A financial industry official stated, "District treasuries are a business that may incur low profitability or losses due to the burden of contributions and interest rate competition, but they are essential for future challenges in city treasury selections. As the bidding will begin after the local elections, the strategic planning of each bank will become increasingly important."
* This article has been translated by AI.
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