Banks Selling 5,000-Pyeong Branches for 52.3 Billion Won

Branch and Business Office Properties of 16,764㎡ Listed in First Half
22 Cases with Lowest Auction Price Totaling 56.2827 Billion KRW
Repeated Bidding Lowers Unit Prices Continuously
More Sales Attempts Expected as Downsizing Strategy Continues

[Asia Economy Reporter Song Seung-seop] Banks are offering vacant branches, left empty after mergers and consolidations, at low prices. The main reason is that there is little foot traffic around the closed branches, so buyers are reluctant to purchase the properties. With the acceleration of non-face-to-face banking and the impact of COVID-19, the number of branches is rapidly decreasing, and the scale of sales is expected to grow even larger.

According to Onbid, the public asset disposal system operated by the Korea Asset Management Corporation (KAMCO), the total building area of branches and sub-branches put up for sale by banks in the first half of this year reached 16,764㎡, approximately 5,071 pyeong. When including the land area attached to the branches, the disposal area is much larger.

The total price of 22 properties, calculated at the minimum auction price, amounts to 56.2827 billion KRW. This already surpasses the total sale announcement scale of 48.824 billion KRW in 2019 within just the first half of this year. Compared to last year's 121.253 billion KRW, it is still about half, but considering the speed of branch closures, it is expected to exceed that amount.

Among domestic banks, KB Kookmin Bank has pushed for the largest real estate sales. Earlier this year, Kookmin Bank proceeded with the sale of seven branches and sub-branches it held. These include land and real estate in Sindang-dong and Munjeong-dong in Jung-gu, Seoul, Gongju and Nonsan in Chungnam, and Yeongcheon in Gyeongbuk. The total minimum bid price at that time was 17.9 billion KRW, the largest scale among sale announcements by commercial banks.

Branch Sales Continue Despite Falling Unit Prices

In June, sale announcements were made for branches including Centum Park and Haeundae branches in Busan, which were about to be closed, including four buildings that had not been sold previously. Notably, the property located in Seongsan-gu, Changwon-si, Gyeongnam, has a building area of 3,755㎡, the largest single announcement. The minimum bid price at that time was also the highest at 11.777 billion KRW.

Woori Bank put the Ansan Seonbu Central Branch in Gyeonggi-do and the Galsan-dong Branch in Incheon up for sale during its branch consolidation process. At the end of June, it also announced the sale of three dormitories it owned in Busan, Changwon, and Sokcho. Dormitories typically serve as accommodations provided by banks for employees assigned to branches outside their residential areas. As the bank reduces branch staff through consolidation, dormitories are also being put up for sale.

Despite actively promoting sales, unit prices continue to decline because buyers are hesitant to purchase the properties. Even branches located in Seoul tend to be auctioned off two to three times. The building of Siwha Steel Land in Siheung, Gyeonggi-do, sold by Hana Bank, was auctioned more than ten times due to repeated failures. During this process, the minimum bid price dropped from over 4 billion KRW to 599 million KRW and was recently sold for 624.5 million KRW.

However, the number and scale of sales are expected to continue increasing. As commercial banks accelerate their downsizing strategies, the number of consolidated branches is growing. According to the Bank of Korea's Economic Statistics System, the number of branches of the five major banks in the first quarter was 4,398, down 191 from last year. This means roughly one branch disappears every two days. Compared to the 96 branches that disappeared in the year from March 2019, the speed has doubled.

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