The competition to select a bank to manage Incheon City’s treasury, valued at 15 trillion won annually, is heating up. Hana Bank is set to challenge Shinhan Bank, which has held the primary treasury position for 20 years, by leveraging its upcoming relocation to Cheongna. With the upcoming bidding process, changes to the scoring criteria regarding interest rates and community contributions are expected to intensify competition among banks.
According to the financial sector and Incheon City Council, the council held a plenary session on June 24 and passed an amendment to the ordinance concerning the designation and operation of Incheon City’s treasury.
The amendment primarily alters the scoring method for certain evaluation criteria. It removes the limit on score differences between rankings for the categories of "interest rates for loans and deposits to the city" and "community contribution performance." Previously, if the top-ranked bank received 10 points, the second-ranked bank had to receive at least 9 points, ensuring a more uniform score distribution. However, with the amendment's passage, score disparities can now be larger, favoring banks that offer higher interest rates and specific community contribution plans.
With the ordinance amendment completed, the schedule for selecting the city treasury bank is expected to move forward. Incheon City plans to announce the bidding as early as next month and select a contractor by August. The next treasury bank will manage city funds from 2027 to 2030.
The Incheon City treasury is approximately 15 trillion won in size, with Shinhan Bank currently holding the primary treasury and NH Nonghyup Bank managing the secondary treasury. Both banks have operated the Incheon City treasury since 2006.
The most significant focus is on the competition for the primary treasury. Unlike Seoul, where one bank can manage both the primary and secondary treasuries, Incheon City regulations prohibit this, leading to fierce competition for the primary treasury. This year, the budget for the primary treasury is about 13 trillion won.
Shinhan Bank is seen as having an advantage due to its 20 years of experience managing the treasury. Its established local network and infrastructure, along with experience in operating district treasuries, enhance its competitiveness. The bank is also viewed as having lower risks associated with the transition to a new treasury bank due to its long-standing operation of the primary treasury system.
Hana Bank is banking on its relocation to Cheongna as a key strategy. Hana Financial Group plans to move its headquarters to Cheongna Dream Town in September. When factoring in existing personnel from the Cheongna Integrated Data Center, the number of Hana Financial employees working in Cheongna is expected to exceed 4,000. Given the increased importance of community contributions due to the ordinance amendment, the impact of Hana Financial’s relocation to Incheon could be a significant variable in the bidding process.
Political changes are also considered a factor. The bidding for the Incheon City treasury will take place shortly after the new city administration begins on July 1. Notably, Incheon Mayor-elect Park Chan-dae stated during his campaign in April that "community contribution is a crucial aspect of the treasury evaluation," leading to speculation that community contributions will be a key evaluation criterion in this bidding.
A source in the financial sector noted, "It is true that Shinhan Bank starts from a favorable position due to its existing operational experience, but with the ordinance amendment enhancing the differentiation in interest rates and community contributions, Hana Bank's Cheongna relocation could play a more significant role than expected."
* This article has been translated by AI.
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