Banks' 'Downsizing' Leads to 5,000 Pyeong of Branches on Sale... Unit Prices Continue to Plummet (Comprehensive)

Branch and Business Trip Office Properties of 16,764㎡ in the First Half of the Year
22 Cases with a Total Lowest Auction Price of 56.2827 Billion KRW
Repeated Bidding Lowers Unit Prices
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 for the first half of the year. Compared to last year's 121.253 billion KRW, it is still about half, but considering the pace of branch closures, it is expected to exceed that figure.

Among domestic banks, KB Kookmin Bank has pursued 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.

In June, including four buildings that were not sold previously, sale announcements were made for branches in Busan such as Centum Park Branch and Haeundae Branch, which were about to be closed. 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.

Shinhan Bank proceeded with the sale of Osan Financial Center and Jincheon Training Center, which was used as a training site, while Hana Bank announced the sale of the Siheung Sihwa Steel Land Branch in Gyeonggi-do. NH Nonghyup Bank announced in March that it would auction three branches in Seoul (Dolgoti Station, Aeogae Station, and Imun-ro).

Branch Sales Continue Despite Falling Unit Prices

Woori Bank put the Seonbu Central Branch in Ansan, Gyeonggi-do, and Galsan-dong Branch in Incheon up for sale during the 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 banks reduce branch staff through consolidation, dormitories are also being put up for sale.

Despite actively promoting sales, unit prices continue to decline. This is because buyers are hesitant to purchase the properties. Even branches located in the metropolitan area tend to be auctioned off two to three times. The Siheung Sihwa Steel Land building 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.

Regional banks other than the five major banks have also entered the sales market. Busan Bank put up a building site of 405.2㎡ in Jaesong-dong, Haeundae-gu, in February with a minimum price of 1.69273 billion KRW, and Daegu Bank listed the Mansong Woobang Branch building of 205.3㎡ in Suseong-gu in June with a minimum price of 839.97 million KRW.

The number and scale of future sales are expected to continue increasing. As commercial banks accelerate their downsizing strategies, the number of consolidated branches is rising. According to the Bank of Korea 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 that roughly one branch disappears every two days. Compared to the 96 branches lost in the year from March 2019, the pace has doubled.

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