Financial Institutions Prepare for Relocation Outside Seoul

Discussions regarding the relocation of public financial institutions are expected to intensify in the second half of this year. A final roadmap for the relocations is anticipated to be unveiled as early as the third quarter, with the selection of target institutions and their new locations becoming key issues.

According to sources in the financial sector on June 25, the government is likely to announce the final roadmap for the relocation of public financial institutions by September. A preliminary draft outlining the general direction may be released next month.

The institutions under consideration for relocation include the Financial Services Commission, the Financial Supervisory Service, the Industrial Bank of Korea, the Export-Import Bank of Korea, the IBK, and the Korea Deposit Insurance Corporation, all of which are based in the Seoul metropolitan area. The government is currently gathering opinions from these key institutions and has prepared multiple relocation scenarios. Additional feedback sessions are planned for July and August, leading to a finalized plan.

Unlike the first phase of public institution relocations, which emphasized dispersion, this second phase is expected to focus on 'selection and concentration.' President Yoon Suk Yeol noted during a meeting marking his first year in office that the previous approach led to diminished concentration benefits, stating, "This time, we plan to consolidate the relocations."

As a result, discussions within the financial sector are leaning towards grouping individual institutions by function and placing them in specific regions rather than scattering them across multiple locations. Key considerations include how to cluster functions related to financial policy and supervision, industrial finance, and agricultural and fisheries finance.

Competition among local governments for specific relocation sites is also intensifying. Sejong is promoting its connectivity with financial policy functions, Wonju is emphasizing synergy with its existing innovation city, Busan is advocating for its vision as a marine and financial hub, and Naju is highlighting the benefits of clustering public institutions related to agriculture and energy.

The financial sector views the grouping of major institutions such as the Financial Services Commission, Financial Supervisory Service, Industrial Bank of Korea, Export-Import Bank of Korea, IBK, and Korea Deposit Insurance Corporation by functional units as crucial to the final roadmap. The focus has shifted from the relocation of specific institutions to the strategic placement of functional groups in designated regions.

However, many experts believe the likelihood of the Industrial Bank of Korea relocating to Busan has decreased. During his campaign, President Yoon stated that relocating the Industrial Bank of Korea to Busan was not feasible, suggesting that the bank will likely remain in Seoul or be grouped with other functional units for separate consideration.

Some have proposed relocating only certain divisions or departments rather than entire institutions. In fact, the Industrial Bank of Korea established a Southern Investment Finance Headquarters in Busan and relocated about 200 employees there during the Yoon Suk Yeol administration's push for relocation.

A financial sector official stated, "Each institution is assessing the potential benefits and suitable locations for relocation through research studies. Given the potential for significant employee pushback, the government is maintaining a cautious stance until a final decision is made."