Deposits That Had Massively Withdrawn
After Big IPOs Like Big Hit End
Financial Sector Sees 5% Increase in Savings and Time Deposits
[Asia Economy Reporters Sunmi Park, Minyoung Kim] As major initial public offerings (IPOs) such as SK Biopharm, Kakao Games, and Big Hit Entertainment have settled, individual investors are placing their money in high-interest special promotions offered by financial institutions. This is because financial companies have strategically launched a series of special savings and time deposit products to attract liquidity that lost investment destinations and refund subscription deposits. In particular, in the case of Big Hit, the refund amount from the public offering subscription reached 58 trillion won, leading financial institutions to absorb funds despite bearing the 'negative margin risk.'
According to the financial sector on the 20th, NH Nonghyup Bank attracted 9,214 applicants on the first day of its special promotion 'All One Five Savings' event, which offers a pre-tax annual interest rate of 5% until the 30th. The number of applicants far exceeded twice the 4,000 customers who were to be selected by lottery to receive the special savings subscription benefits. This savings product is a fixed monthly installment savings account with a monthly deposit amount of 200,000 won and a 12-month subscription period. It is exclusively available on the mobile platform All One Bank, offering a pre-tax annual interest rate of 5% without any other preferential conditions when automatic transfer is made on the monthly deposit date. A Nonghyup Bank official said, "Only All One Bank customers can apply, and subscription is possible through a lottery after application, but the 5% annual interest rate on savings is rare these days, so many people applied," adding, "The bank also benefits from attracting customers through high-interest savings products."
The response to K Bank's 5% annual interest rate 'Hot Deal Savings' was also enthusiastic. The second event held on the 14th, shortly after the first event (September 22) ended, exceeded 5,000 applicants in just two days. It was an event applying a 5% annual interest rate unconditionally to 5,000 customers selected by lottery. The savings deposit period is one year, with a monthly deposit amount of 300,000 won. The closing speed was faster than the first event, which surpassed 5,000 applicants in six days. A K Bank official said, "The 5% annual Hot Deal Savings sold last month received great response, leading us to plan the second event," and "The performance of the second event exceeded that of the first."
Welcome Savings Bank launched the Welcome First Transaction Preferential Time Deposit, offering a 6% annual interest rate, aiming to sell 10,000 accounts at 2,000 accounts per day from the 12th to the 16th. This product achieved sales of about 9,000 accounts. Due to the rapid depletion of savings products offering over 5% interest rates immediately after sales start, banks such as credit unions that recently launched high-interest savings products are imposing conditions such as lottery selection after application or sales ending upon depletion. The needs of investors thirsty for high-interest products are being utilized in bank marketing efforts to attract even one more customer.
Savings banks are also seeing significant effects in attracting funds by continuously raising deposit interest rates. SBI Savings Bank, the largest in asset size, saw its deposit balance increase by 156.8 billion won this month alone. As of the end of last month, deposits rose sharply from 7.0439 trillion won to 7.2007 trillion won as of the 18th. SBI Savings Bank raised its time deposit interest rate by a total of 0.30 percentage points twice last month. If subscribed online, the rate can go up to 2.0%. During the same period, OK Savings Bank recorded a net deposit increase of 230 billion won, with about 110 billion won of that from individual net deposits. OK Savings Bank also raised its interest rate by 0.3 percentage points this month, clearly benefiting from the rate hike. Deposits received through the joint non-face-to-face application (app) 'SB TokTok Plus' of 67 savings banks reached 318.7 billion won by the 15th of this month. Most of these are time deposits with higher interest rates than commercial banks.
The influx of money into high-interest savings and time deposits is due to abundant liquidity in the market and the end of the public offering subscription boom, creating an environment where investment funds with nowhere else to go naturally flow toward options offering even slightly higher interest. Also, the refund of subscription deposits following the completion of major public offerings is considered a significant factor. The general subscription for Big Hit's public offering held on the 5th and 6th attracted a total subscription deposit of 58.4237 trillion won. Since investors were allocated two shares per approximately 10 million won invested, most of the subscription amount, about 58.2 trillion won excluding 192.5 billion won of the total public offering amount, was refunded.
An industry insider said, "Investors who borrowed funds to participate in major IPOs tend to invest the refunded subscription deposits in safe products to earn returns rather than repaying loans," adding, "With the resurgence of COVID-19 and growing economic uncertainty, many people are looking for places where they can lock in their money with slightly higher interest rates if the deposit burden is not too high."
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