Yoon Seok-yeol and Lee Jae-myung's 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 Reporter Jin-ho Kim] National policy banks such as KDB Industrial Bank, which suffered from the ‘relocation to provinces’ controversy during the general election over two years ago, are once again facing uncertainty. This is because the leading presidential candidates from both ruling and opposition parties have pledged to relocate KDB Industrial Bank to the provinces ahead of the presidential election. Both candidates argue that 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 ‘decline in competitiveness.’
According to financial and political circles on the 23rd, 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," adding, "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 the 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 national policy banks such as KDB Industrial Bank to the provinces is ‘balanced regional development.’ They argue that national policy banks must be sent to the provinces to achieve balanced development of the country.
However, national policy banks like KDB Industrial Bank are strongly opposed to this. They express deep concerns that the push for relocation is being made without considering the characteristics of the financial industry and is driven solely by political calculations. A representative from a national policy bank said, "Considering its unique characteristics, it is advantageous for the headquarters to be located in Seoul," adding, "Every election season, everyone calls for relocating national policy banks to the provinces, which causes great anxiety among employees each time."
The most worrisome issues are the outflow of talented personnel and a decline in work efficiency. In fact, one national policy financial institution suffered greatly from the outflow of talented staff after relocating some of its headquarters to the provinces. Another problem pointed out is that employees waste a considerable amount of time commuting between Seoul and the 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 move 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 national policy banks to the provinces is seen 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’ tactic this time. Legal amendments are required for the relocation of national policy banks, and it is reported that both parties have reached some level of consensus on this.
Meanwhile, the Financial Workers’ Union has stated that it will respond with an ‘all-out struggle’ regarding the push to relocate national policy banks to the provinces. If the two candidates do not retract their statements, it is highly likely that the union will engage in collective actions supporting a specific candidate.
On the 18th, the Financial Workers’ Union criticized candidate Yoon’s push to relocate KDB Industrial Bank to Busan, saying, "He has made reckless remarks without love or concern for the country." In a statement, the union said, "It is questionable whether candidate Yoon understands the role of KDB Industrial Bank in the national economy," and added, "Relocating KDB Industrial Bank to Busan is an act of abandoning the unique characteristics of national policy banks and the East Asian financial hub policy, and we will respond with an all-out struggle in the future."
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