As the government prepares to announce its second round of public institution relocations, backlash is growing within the financial sector. Following the three major policy banks—Korea Development Bank, Export-Import Bank of Korea, and IBK Industrial Bank of Korea—unions from the Korea Trade Insurance Corporation and the Financial Supervisory Service have also joined the opposition. The dual goals of regional balanced development and maintaining financial and export support functions are now in direct conflict.
According to relevant departments and the financial sector on August 18, the government plans to finalize its second public institution relocation plan by the end of the year. Minister of Land, Infrastructure and Transport Kim Yoon-deok recently stated regarding the second relocation, "Unless there are special circumstances, the goal is to have zero institutions remaining in Seoul, as directed by President Lee Jae-myung. All public and administrative institutions are to be relocated as a principle."
This has led to financial institutions that remained in the metropolitan area during the first relocation being considered key candidates for the second round. However, internal dissent is escalating into collective action. The unions of the three major policy banks held a resolution meeting, arguing that the functions of policy financial institutions and the characteristics of the financial industry must be taken into account. They contend that forcing the relocation of policy banks, which are essential for supplying funds to companies in the capital region's advanced industries, will inevitably reduce the efficiency of financial support.
The Korea Trade Insurance Corporation's union has also expressed strong opposition, warning that the relocation could lead to inefficiencies in the export finance ecosystem and support for export companies. The corporation plays a crucial role as a public export credit agency (ECA), connecting funds from commercial banks to export companies through insurance and guarantees rather than direct loans. They argue that the geographical separation of demand for export finance and support institutions will inevitably slow down the speed and scale of support.
Moreover, they emphasize that most export companies benefiting from export finance are located in the metropolitan area. According to the National Statistical Portal (KOSIS), 63.7% of small and medium-sized enterprises' export value ($29.77 billion) in the first quarter of this year came from the capital region, which includes Seoul, Gyeonggi, and Incheon. Including large corporations, the capital region's export share rises to 77.7%. The union believes that separating the demand for export finance from the support institutions will lead to delays in assistance.
Concerns are also being raised that this move contradicts the trend of strengthening the link between public support and private finance. Initiatives such as export package guarantees funded by banks and supply chain strengthening guarantees based on contributions from large corporations are expanding. Given that cooperation among stakeholders is crucial, the geographical accessibility of the capital region, where major banks and corporate headquarters are concentrated, is vital.
There is also a risk that competitiveness in national strategic export sectors, such as overseas large projects and defense, could deteriorate. Designing financial structures to secure overseas projects in areas like plants, infrastructure, and shipbuilding requires collaboration among the Korea Trade Insurance Corporation, policy banks, domestic and foreign banks, and legal and accounting firms. This means considering the process of rebuilding these networks and potential gaps in operations.
A representative from the Korea Trade Insurance Corporation's union stated, "Our fundamental role is to collaborate with the financial market to ensure that necessary funds are supplied to export companies and overseas projects. Separating the corporation from the export finance ecosystem and its primary demand sources is likely to increase costs and inefficiencies rather than contribute to regional balanced development."
Additionally, opposition is spreading beyond policy financial institutions to supervisory agencies. The Financial Supervisory Service's union issued a statement the previous day, arguing that relocation could weaken access for financial consumers and the agency's on-site supervisory capabilities. Although the Financial Supervisory Service is not classified as a public institution under the Public Institution Operation Act, it has consistently been listed as a candidate for relocation.
The union points out that 81.4% of financial complaints are concentrated in the metropolitan area, raising concerns that moving the supervisory agency away from this region could reduce accessibility. They also note that 91.6% of financial company headquarters, 88.3% of on-site inspection targets, and 72.7% of listed company headquarters are located in the capital region.
The Financial Supervisory Service's union warned, "If the agency relocates, employees will have to travel back to Seoul for inspections, leading to inefficiencies and additional operational costs for regional offices. If personnel outflow becomes a reality, the supervisory capacity is likely to decline."
* This article has been translated by AI.
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