'Gangnam Also Removed' Sparks Bank Branch Consolidation Debate

Four Major Banks Expected to Merge or Close Over 100 Branches This Year

[Asia Economy Reporter Kim Min-young] Major commercial banks are consolidating 83 branches by next month, including closing branches in the Gangnam area of Seoul. It is expected that more than 100 branches will disappear this year.

According to the banking sector on the 15th, the four major banks?Shinhan, KB Kookmin, Hana, and Woori?consolidated 71 branches in January and February. An additional 12 branches will close this month and next month.

KB Kookmin Bank is actively reducing branches. In January, KB Kookmin Bank consolidated 38 branches at once, including Jamsil Els Branch in Songpa-gu, Seoul, Gangbyeon Station Branch in Gwangjin-gu, and Busanjin Branch in Busan. A KB Kookmin Bank official said, “We consolidated for efficient operation,” adding, “Existing branch staff have been relocated to consolidated branches, other branches, or headquarters, and some employees have left due to voluntary retirement or retirement age.”

Hana Bank also closed 24 branches in January and February. Hana Bank consolidated branches mainly located in the metropolitan area, such as Samsung 1-dong Branch in Gangnam-gu, Seoul, Mokdong 14 Complex Branch in Yangcheon-gu, Sinchon Station Branch in Seodaemun-gu, and Yatap Branch in Seongnam-si, Gyeonggi Province. Hana Bank stated, “We consolidated to provide specialized financial services.”

Shinhan Bank and Woori Bank also closed 3 and 6 branches respectively in January and February.

The four major banks plan to close 12 more branches by next month, resulting in a total of 83 branches disappearing by April.

On the other hand, the number of newly opened or planned branches this year across the four major banks is six. Considering both closures and openings, the net number of closed branches is 77, the largest since 182 branches in 2017.

According to the Korea Federation of Banks and the Financial Supervisory Service, the number of manned branches of the four major banks decreased by 167 in 2016, 182 in 2017, 12 in 2018, and 38 last year.

Major banks are expected to continue consolidations after the second quarter, raising the possibility that more than 100 branches will be consolidated this year. The decrease in visitors due to the novel coronavirus disease (COVID-19), combined with remote work and digitalization, may accelerate branch closures.

A commercial bank official said, “Due to the economic downturn and decrease in visitors caused by COVID-19, as well as remote work, branch consolidation has become a major issue within banks.”

As of this month, the four major banks have about 3,240 branches. This is a decrease of about 680 branches from 3,924 in 2015.