Yoon Seok-yeol and Lee Jae-myung Pledge to Relocate Industrial Bank and Others to Provinces
Aiming for Balanced Development... National Banks 'Oppose'
Concerns Over Talent Drain and Competitiveness Decline
[Asia Economy Kim Jin-ho] KDB Industrial Bank, which suffered from the ‘relocation to provinces’ controversy during the general election over two years ago, is once again in a state of unease. This is because the leading presidential candidates from both the ruling and opposition parties have pledged to relocate KDB Industrial Bank to a province ahead of the March presidential election. Both candidates argue that the relocation should be pursued based on balanced regional development, but there are growing concerns that considering work efficiency and the bank’s unique characteristics, this could lead to a ‘weakening of competitiveness.’
According to financial and political circles on the 18th, Yoon Seok-yeol, the People Power Party candidate, publicly promised to relocate KDB Industrial Bank to Busan during his visit there on the 15th. He said, "For Busan to become the world’s top maritime city and an advanced city, financial resources must be supported," and added, "I will relocate KDB Industrial Bank to Busan."
Earlier, Lee Jae-myung, the Democratic Party candidate, also pledged that if elected president, he would relocate all 200 public institutions currently located in the Seoul metropolitan area to provinces. This includes not only KDB Industrial Bank but also the Export-Import Bank of Korea and IBK Industrial Bank of Korea.
The rationale behind the leading presidential candidates from both parties pushing for the relocation of KDB Industrial Bank and other policy banks to provinces is ‘balanced regional development.’ They argue that policy banks must be sent to provinces for the country’s balanced development.
However, the policy banks, including KDB Industrial Bank, have a different view. They point out that the push for relocation does not consider the characteristics of the financial industry and is driven solely by political calculations. A representative from a policy bank said, "Considering the unique characteristics, it is advantageous for the headquarters to be located in Seoul," and added, "Every election season, everyone calls for the relocation of policy banks to provinces, so employees feel a great deal of anxiety each time."
The most concerning issues are the outflow of talented personnel and the decline in work efficiency. In fact, one policy financial institution suffered greatly from the outflow of talented personnel after relocating some of its headquarters to provinces. Another problem pointed out is that employees waste a considerable amount of time commuting between Seoul and provinces for meetings with the government or headquarters.
Experts also point out that the losses will outweigh the gains. Professor Lee Min-hwan of Inha University’s Department of Global Finance said, "If key authorities with central functions such as the Financial Services Commission or the Financial Supervisory Service do not move together, the effect will be extremely limited," and added, "A unilateral relocation to places without proper financial infrastructure is likely to lead to a decline in competitiveness."
Meanwhile, the financial sector views the possibility of relocating policy banks to provinces as higher than ever. Since both leading presidential candidates have pledged this, there are concerns that whoever wins will not treat this as a mere ‘vote-catching’ promise this time. Revising related laws is necessary for the relocation of policy banks, and it is reported that both parties have formed some degree of consensus on this.
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