As online banking and other non-face-to-face channels gain popularity, bank branch consolidations are on the rise. Banks are not only closing branches but also selling off underutilized properties, including employee dormitories, to enhance asset efficiency.
According to the financial sector on September 7, KB Kookmin Bank announced earlier this month that it is seeking bids for a "real estate leasing and sales management service." The plan includes leasing a business facility in Gaepo-dong and selling 16 properties owned by the bank, including a dormitory in Daejeon and the Cheongju Comprehensive Financial Center. The total appraised value of the properties slated for sale, excluding those for leasing, is approximately 180 billion won.
In July, KB Kookmin Bank also listed nine underutilized properties for sale, four of which are currently in the process of selecting preferred bidders.
Other banks are also accelerating the disposal of underutilized properties. Shinhan Bank is in the process of selling eight properties, including an employee dormitory in Seongsu-dong and former branches in Jeongneung and Busan Station. Woori Bank is also moving forward with the sale of 39 underutilized properties, including the former Galleria Palace branch and the Ahyeon Station branch, as well as the old Suwon Financial Center.
The push to sell off underutilized properties is driven by the reduction of branches due to the rise of non-face-to-face banking and the need for asset efficiency. As more consumers handle major financial tasks, such as loans and product subscriptions, through mobile and internet platforms, the role of physical branches is diminishing. Properties like employee dormitories, which are seeing decreased usage, are also being targeted for sale.
According to the Bank of Korea, the number of internet banking transactions, including mobile banking, averaged 28.29 million per day last year, a 112.2% increase from 13.33 million in 2020. This rapid shift to non-face-to-face channels is reducing the necessity for banks to operate physical branches.
In fact, the number of domestic branches for the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) decreased from 4,425 to 3,752 over the same period, a drop of 15.2% (673 branches). As banks are generally not allowed to hold properties that are not directly used for operations, the closure of branches has created a strong incentive to dispose of underutilized real estate.
A representative from a major bank stated, "Operating a branch incurs costs not only for real estate but also for labor and maintenance, while the trend shows a decline in customer visits to physical locations due to the rise of online banking. As branches consolidate, we have no choice but to sell off properties that are no longer used for business purposes."
* This article has been translated by AI.
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