Banks Focused on the Super Rich... Competition for Exclusive Specialized Branches

Woori and Hana Bank Launch Exclusive Specialized Branches for High-Net-Worth Clients
Offering Asset Management and Business Succession Consulting... One-Stop Service

Interior view of the TCE Headquarters Center opened at Woori Bank Headquarters in Jung-gu, Seoul. (Photo by Woori Bank)

Kim Cheolsu (67, pseudonym), a small business owner, recently visited a specialized branch of a domestic commercial bank dedicated to high-net-worth individuals. Although Kim had been confident in managing his own finances, as the time approached to pass on the company he had built over many years to his son, he visited the bank upon a friend's recommendation. At the specialized branch, where he initially expected to receive only simple investment advice, Kim was highly satisfied after receiving 'business succession consulting.' He found a way to significantly reduce the inheritance tax burden that arises during business succession. Encouraged by this, Kim decided to entrust his asset management to the bank as well.

Major commercial banks are fiercely competing to secure 'super-rich' clients. They are expanding their services beyond the simple asset management styles of the past, into various fields such as inheritance, gifting, taxation, and real estate. Asset management is considered one of the core businesses and future growth engines for banks.

According to the financial sector on the 21st, Woori Bank opened a specialized branch called 'Two Chair Exclusive (TCE)' on the 20th for high-net-worth individuals with assets exceeding 3 billion KRW.

The 'TCE Center,' opened at the main branch in Jung-gu, Seoul, is Woori Bank's second branch targeting ultra-high-net-worth individuals. It is staffed with eight private bankers (PBs) specializing in asset management, including experts in taxation and real estate, providing one-stop comprehensive financial consulting in one location. In particular, Woori Bank leverages its corporate finance expertise to offer asset management and business succession consulting for company owners.

Other commercial banks also operate specialized branches targeting the super-rich. Hana Financial Group runs two 'Club1' branches (in Samseong-dong and Hannam-dong) for clients with entrusted assets of 3 billion KRW or more. The 'Club1 Hannam Branch,' opened last month, is a complex branch combining Hana Bank's Club1 Hannam PB Center and Hana Financial Investment's Club1 Hannam Wealth Management (WM) Center. The comprehensive asset management services include domestic and international taxation, as well as customized specialized programs such as overseas investment and immigration consulting. Kookmin Bank and Shinhan Bank also operate the 'Star PB Center' and 'Shinhan Privilege Center,' respectively.

The reason commercial banks are putting great effort into asset management businesses targeting the super-rich is largely due to the sharp increase in individuals holding large financial assets. According to the 'Korea Wealth Report' published by KB Financial Group last year, the number of wealthy individuals with financial assets exceeding 1 billion KRW reached 354,000 at the end of 2019, more than doubling over the past decade. A bank official said, "For high-net-worth individuals, the scale of investment is so large that the income share from asset management business is absolute. Also, since wealth can be passed down to children through inheritance and gifting, banks have no choice but to continuously expand specialized branches to attract these clients."

This also reflects efforts to overcome the limitations of traditional banking revenue sources such as net interest margin amid prolonged low-interest-rate conditions. Over the past few years, banks have reorganized their organizations and made significant efforts to launch various services to strengthen their asset management businesses. A financial sector official advised, "Facing deteriorating profitability, banks need to further develop areas where they have strengths, such as asset management. They should focus more on strengthening both face-to-face and non-face-to-face services in the WM sector, which is regarded as a future growth engine."

This content was produced with the assistance of AI translation services.