[Re-deposit Battle] ① Catch the Yetech Families with Maturing Deposits... Special Offers from Secondary Financial Institutions Emerging One After Another

Special promotional products aimed at capturing the "Yetech" crowd (savings + investment) are reappearing one after another, centered on the secondary financial sector including mutual finance institutions such as Saemaeul Geumgo and savings banks. As the maturity dates for the deposits and savings of the Yetech crowd, which saw a significant inflow last year, approach, active movements for reinvesting funds are emerging.

According to the financial sector on the 28th, it is not difficult to find deposits with interest rates in the 5% range (12 months, as of the 25th) at Saemaeul Geumgo. Considering that the representative fixed deposit product interest rates of the four major banks?KB Kookmin, Shinhan, Hana, and Woori?are around 3.65% to 3.75%, this is more than 1 percentage point higher.

[Image source=Yonhap News]

In the Seoul area, the Itaewon 1-dong Saemaeul Geumgo headquarters offers an annual interest rate of up to 5.24% on the 'MG The Banking Fixed Deposit,' and about 30 other Saemaeul Geumgo branches including Noryangjin, Seongsu 2-ga 1-dong, Namdaemun, Gwangjin Jungang, Gyo-nam-dong, Dapsimni 2, and Daehak-ro offer 5.23%. In the provinces, rates in the 5.5% range can be found. For example, Jeonbuk Wonkwang Saemaeul Geumgo offers an annual interest rate of 5.55% on the 'Block Deposit' (12 months).

Some branches also offer savings products with interest rates as high as 10% (for 12 months or more). According to disclosures on the Saemaeul Geumgo Central Association website, Kaebong, Dapsimni, and Yongma Saemaeul Geumgo are running special promotions, and the Saemaeul Geumgo in Dohwa 2-dong, Incheon, also introduced a special savings promotion with a 10% interest rate. However, preferential conditions such as in-person subscription and membership in mutual aid associations must be checked. The situation is similar for credit unions. Gujeuk, Hwaseo, and Cheonan Seobu Credit Unions offer interest rates in the 4.5% range for one-year fixed deposit products.

These high interest rates are similar to those during the peak Yetech period from October to December last year. According to the Bank of Korea Economic Statistics System, the interest rate on Saemaeul Geumgo fixed deposits (1 year) rose from 4.68% in October last year to 5.44% in November and 5.48% in December, before falling to 4.23% in June this year. Credit unions also saw rates surge to 4.59% in October, 5.39% in November, and 5.44% in December last year, before recording 4.07% as of June this year.

In this regard, a mutual finance sector official explained, "Typically, each branch or cooperative requires 70-80% reinvestment," adding, "High-interest products are emerging to reinvest deposits attracted during last year's high-interest period." Especially for Saemaeul Geumgo, which experienced a bank run (massive deposit withdrawal) crisis last month, the need to reinvest deposits is also a factor.

Savings banks are also fiercely competing for deposits. Products offering up to 4.5% interest rates are appearing one after another, such as HB Savings Bank's 'e-Rotating Fixed Deposit,' JT Chin-Ae Savings Bank's 'Non-face-to-face Rotating Fixed Deposit,' Dongyang Savings Bank's 'Fixed Deposit,' and Joheung Savings Bank's 'e-Fixed Deposit.' According to disclosures by the Korea Federation of Savings Banks, the average interest rate for 12-month fixed deposits at all 79 savings banks is 4.08% per annum, up 0.33 percentage points from 3.75% in March.

However, authorities are closely monitoring the situation, warning that deposit competition like last year could negatively impact financial stability. On the 24th, Lee Bok-hyun, Governor of the Financial Supervisory Service, emphasized at a financial situation inspection meeting, "It is necessary to refrain from external competition such as handling high-interest special fixed deposits and to encourage strengthening asset soundness management, including delinquency rates."