Yoon's Proposal to Move Korea Development Bank to Busan... Expected to Heat Up Ahead of Local Elections

Concerns Over Talent Drain and Weakening Competitiveness

[Asia Economy Reporter Yoo Je-hoon] National policy banks are restless amid rumors of relocation to provincial areas. President-elect Yoon Seok-yeol has made the relocation of KDB Industrial Bank's headquarters to Busan a key campaign pledge. With local elections scheduled for June, the relocation of national policy banks to provinces is expected to remain a hot issue. Banks like KDB are concerned about talent drain and the resulting weakening of competitiveness.

During the recent presidential election, President-elect Yoon proposed relocating the KDB headquarters as a major pledge for the Busan region. The main content of this pledge is to transform Busan's industrial ecosystem into a digital convergence advanced industry hub and to foster Busan as a smart digital economic city by relocating KDB there.

The People Power Party is also steadily working to support this. Earlier, 15 lawmakers from the Busan region jointly proposed the "Partial Amendment to the Korea Industrial Bank Act" in January, which centers on relocating the KDB headquarters to Busan. The amendment includes names such as Seo Byung-soo, a former mayor of Busan, Jang Je-won, the chief of staff to the president-elect, and Park Soo-young, a special advisor to the president-elect's secretariat.

Inside KDB, there is strong opposition to the Busan relocation. There are concerns that leaving Seoul, the economic and financial center of Korea, could cause serious talent outflow and various inefficiencies in operations. Anxiety among junior employees and job seekers is growing. A KDB official said, "Candidate Lee Jae-myung also raised the issue of relocating public institutions to provinces, but did not specify particular institutions, so the labor union supported it largely as a last resort. It is awkward because expectations in the region have been rising early on."

Other national policy banks are equally uneasy. There is a mood within some ruling party circles discussing the relocation of other national policy banks to provinces. President-elect Yoon also stated during a campaign rally in Sasang District, Busan, on the 4th, "We will ensure that many banks, including KDB, have their headquarters in Busan."

There are considerable concerns that such attempts could erode Korea's financial competitiveness. According to the Global Financial Centres Index (GFCI), a representative indicator evaluating the competitiveness of global financial cities, as of the survey in September last year, Seoul and Busan ranked 13th and around 33rd respectively, lagging behind leading cities such as Hong Kong (3rd), Singapore (4th), as well as competitors Shanghai (6th), Beijing (8th), and Tokyo (9th).

Nevertheless, despite these concerns, the theory of relocating national policy banks to provinces is likely to gain more ground. The local elections, which will determine the new government's control over state affairs, are just over two months away. Although a formidable opposition with 172 seats remains, they are also actively in favor of relocating public institutions to provinces, and given the nature of local elections focusing on regional issues, it is widely expected they will not oppose it. A financial sector official said, "Financial public enterprises that previously moved their headquarters to provinces have suffered from talent outflow and other difficulties. While we agree with the grand cause of balanced development, if the relocation becomes a reality, the side effects will not be insignificant."

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