Yoon and Lee Push for Relocation of State-Owned Banks to Provinces... Financial Labor Union Criticizes as "Thoughtless Remarks Lacking Love and Concern for the Nation" (Comprehensive)

Yoon Seok-yeol and Lee Jae-myung pledge to relocate Korea Development Bank and others to provinces
Aiming for balanced development... National policy banks 'oppose'
Concerns over talent drain and competitiveness decline

[Asia Economy Reporter Jin-ho Kim] KDB Industrial Bank, which suffered from the ‘relocation to provinces’ controversy during the general election over two years ago, is once again facing uncertainty. This is because the leading presidential candidates from both ruling and opposition parties have pledged to relocate KDB 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 operational 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 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," adding, "I will relocate KDB 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 but also the Export-Import Bank of Korea and IBK Industrial Bank.

The rationale behind the leading presidential candidates’ push to relocate KDB and other policy banks to provinces is ‘balanced regional development.’ They argue that policy banks must be sent to provinces to achieve national balanced development.

However, the policy banks, including KDB, 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 stated, "Considering the unique characteristics, it is advantageous for the headquarters to be located in Seoul," adding, "Every election season, everyone calls for relocating policy banks to provinces, which causes great anxiety among employees."

The most concerning issues are the outflow of talented personnel and a decline in operational efficiency. In fact, one policy financial institution suffered greatly from the outflow of talented staff after relocating some of its headquarters to provinces. Another problem pointed out is that employees waste a significant amount of time traveling 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, "Unless key authorities with central functions such as the Financial Services Commission or the Financial Supervisory Service also relocate together, the effect will be extremely limited," adding, "A unilateral relocation to a place without proper financial infrastructure is likely to lead to a decline in competitiveness."

Within the financial sector, the possibility of relocating policy banks to provinces is considered higher than ever. Since both leading presidential candidates have made this a campaign pledge, there are concerns that whoever wins will not treat this as a mere ‘vote-catching’ tactic this time. Relocating policy banks requires amendments to related laws, and it is reported that both ruling and opposition parties have reached a certain consensus on this.

Meanwhile, the Financial Workers’ Union criticized candidate Yoon’s push to relocate KDB to Busan on the same day, saying he "spouted reckless remarks without love or concern for the country." In a statement, the union said, "It is questionable whether candidate Yoon understands KDB’s role in the national economy," and added, "Relocating KDB to Busan is an act of abandoning the unique characteristics of policy banks and the East Asian financial hub policy, and we will respond with full-scale resistance going forward."