Banks' Battle to Attract '50 Trillion Won in Land Compensation' Funds

More than 40 Trillion Won Released in the Seoul Metropolitan Area Due to the Launch of the 3rd New Town
Banks Establish Dedicated Teams... Strengthening Land Compensation Consulting

[Asia Economy Reporter Jo Gang-wook] Competition among banks to capture the approximately 50 trillion won worth of land compensation payments being released through this year, following the launch of the government’s 3rd phase new towns, is intensifying. Each bank has officially entered the high-value fund attraction battle by establishing dedicated teams and introducing new services.

According to the financial sector on the 11th, banks are currently forming separate dedicated land compensation organizations or strengthening land compensation consulting services within their Wealth Management (WM) services. Each organization is mobilizing as many professionals as possible, including lawyers, tax accountants, accountants, and appraisers, to provide comprehensive services at once, covering investment strategies after receiving compensation, tax savings, inheritance, and gift methods.

IBK Industrial Bank launched the ‘IBK Land Compensation Core Supporters’ on the 5th, composed of tax accountants and real estate experts from the head office’s Asset Management Strategy Department, along with PBs from IBK WM Center and IBK Investment & Securities. This organization supports consulting on transfer, gift, inheritance, and real estate valuation needed during the land compensation process and provides asset management solutions for land compensation bonds. Specialized services such as comprehensive financial income taxation and free gift reporting agency are also offered.

Earlier, major domestic banks had already formed dedicated teams since last year to actively attract land compensation funds. This is because the government’s execution of land compensation payments for the 3rd phase new towns is scheduled to be in full swing starting this year.

NH Nonghyup Bank and Hana Bank introduced the ‘Land Compensation Supporters’ and ‘Hana Land Compensation Dream Team’ respectively in September last year. Nonghyup Bank’s Land Compensation Supporters is a dedicated land compensation consultation organization within the NH All100 Advisory Center, supporting all-in-one asset management consultations covering real estate, tax, and financial products.

Hana Land Compensation Dream Team also provides one-on-one customized consultation consulting on various issues related to land compensation, based on the know-how and capabilities of Hana Bank’s existing ‘Real Estate Advisory Center,’ ‘Inheritance & Gift Center,’ and ‘Asset Management Support Team.’

Woori Bank has been operating a Land Compensation Consultation Center at PB-specialized branches since November last year. In the same month, Sh Suhyup Bank and Korea Citibank also launched and are operating the ‘Sh Land Compensation Dream Team’ and ‘Land Compensation Citi Asset Management Team,’ respectively.

Shinhan Bank offers the ‘Land Compensation Preferential Service with Shinhan Bank Experts’ through its PWM Center, which handles asset management tasks. KB Kookmin Bank provides direct consultation support from head office experts when land compensation consultation applications are made at each branch.

The estimated scale of land compensation payments to be released from the second half of last year through the end of this year is about 50 trillion won. Including the 3rd phase new towns land compensation payments, which are expected to exceed 30 trillion won, more than 40 trillion won in land compensation payments are anticipated to be released in the metropolitan area alone. As the number of land compensation recipients increases, banks gain a good opportunity to increase deposits and secure high value-added PB customers. In particular, this can be linked not only to simple deposit attraction but also to launching new products, reinvestment using affiliates, and indirect investment consulting.

An official from a commercial bank said, “Not only the fee income from providing services but also if transactions continue with deposits or investment products, it becomes possible to secure high-quality customers,” adding, “The key is what and how much each bank will differentiate.”