[1mm Finance Talk] Banks to Slow Down Branch Consolidation This Year... Here's Why

Nearly 100 Branch Closures Annually,
But This Year: "No Plans for the First Half"
"Current Levels Likely to Be Maintained"
From 73 Closures in Q1 Last Year to 5 in Q3...
Pace of Decline Slows
Physical Consolidation Largely Complet

Commercial banks in South Korea, which have been reducing their number of branches by around 100 each year, are expected to slow down the pace of branch consolidation and closures this year. Most banks have yet to finalize their plans for the first half of the year, and some are even considering a slight increase in the number of branches. The decline in the number of branches has also noticeably slowed. While 73 branches disappeared through closures or consolidations in the first quarter of last year, only five branches were closed in the third quarter.

A counter at a commercial bank in Seoul. Photo by Jin-Hyung Kang aymsdream@

According to the financial sector on January 14, KB Kookmin Bank has not set any plans for branch consolidation or closures for the first half of this year. The Bucheon City Hall branch was merged into the Bucheon City Hall Station branch on January 2, following the expiration of an institutional agreement, but this was based on a plan established in the second half of last year. In fact, in the first half of this year, a new branch will be opened at Samyuk Seoul Hospital in Dongdaemun-gu, Seoul, on February 9, in accordance with an institutional agreement.

Other banks have also not announced any significant consolidation plans so far. Given that financial authorities require banks to notify customers at least three months in advance, it is unlikely that many branches will be reduced in the first half of the year. An official from a commercial bank stated, "It is highly likely that the number of branches will either decrease or increase slightly, maintaining the current level."

This is in stark contrast to previous years, when commercial banks reduced their branches by as many as 100 each year. Over the past five years, the number of branches at commercial banks decreased by 237 in 2021, 199 in 2022, 62 in 2023, 84 in 2024, and 89 (as of September) in 2025. However, looking at last year on a quarterly basis, the number of branches decreased by 73 in the first quarter, 11 in the second quarter, and only 5 in the third quarter, showing a clear slowdown in the rate of decline. As of the end of September last year, there were 3,754 commercial bank branches.

The reason banks are not actively pursuing 'branch restructuring' in the first half of this year is that the consolidation efforts planned in previous years have largely been completed. Shinhan Bank, for example, finished most of its 'large-scale integration' of personal and corporate branches, which it had been working on for the past two years, by the end of last year. This involved physically merging branches that previously coexisted under the same roof, with personal banking on the first floor and corporate banking on the second floor. Some banks are also strategically maintaining branches to attract elderly customers. An official from a commercial bank said, "We are not reducing branches to improve financial accessibility for elderly customers," adding, "We plan to maintain a similar approach this year."

There are also concerns that it has become difficult to autonomously pursue restructuring since financial authorities made the branch closure process more stringent in 2023. Before deciding to close a branch, banks must go through a preliminary process of collecting feedback from customers who use the branch. They must also provide appropriate alternative measures to minimize inconvenience caused by the closure. Afterward, the adequacy of these alternatives is reassessed through a post-evaluation of consumer impact.

In particular, the full-scale implementation of bank agency services this year has added another layer of restriction. Bank agency services allow institutions such as post offices or savings banks to conduct core banking transactions-such as deposits, savings, loans, and remittances-on behalf of banks. During the pilot period, which begins in the first half of this year, financial authorities are guiding banks to limit the closure of nearby branches.

An official in the banking sector said, "Given the increase in non-face-to-face transactions and rising branch maintenance costs, restructuring of physical branches remains necessary for commercial banks, regardless of the bank agency system." The official added, "However, government guidelines aimed at ensuring financial accessibility impose practical constraints on banks' ability to autonomously make management efficiency decisions."