Debate Over KDB Busan Move: "Financial Hub Dispersion Weakens Global Financial Competitiveness"

National Financial Industry Union Holds National Assembly Forum with Democratic Party and Justice Party Lawmakers

[Asia Economy Reporter Yoo Je-hoon] Ahead of the local elections in June, the pledge by President-elect Yoon Seok-yeol to relocate the KDB Industrial Bank headquarters to Busan has become a hot topic again, prompting the Financial Workers' Union to hold a debate opposing the move. The public opinion battle within and outside the Industrial Bank and the financial sector is gradually intensifying.

The National Financial Industry Labor Union held a debate titled "Financial Hub Policy Seen Through the Controversy Over the Industrial Bank Relocation" on the morning of the 28th at the National Assembly Members' Office Building in Yeouido, Seoul. The debate was co-hosted by Democratic Party members Kim Young-joo, Seo Young-kyo, Kim Min-seok, Min Byung-duk, Oh Ki-hyung, and Justice Party member Bae Jin-gyo.

In his opening remarks, Park Hong-bae, chairman of the Financial Workers' Union, explained the background by stating, "Considering the scale and capabilities of the domestic financial industry and its ability and limitations to compete with overseas players, it is virtually impossible to foster another financial hub outside Seoul, the economic center where the financial ecosystem is already established."

Recently, the proposal to relocate the Industrial Bank headquarters to Busan has been reignited ahead of the new government's launch and the local elections. The Presidential Transition Committee's Special Committee on Regional Balanced Development named the relocation of the Industrial Bank headquarters as one of the seven major tasks for the Busan region during a press conference announcing national agenda items the day before. Additionally, Choo Kyung-ho, nominee for Deputy Prime Minister and Minister of Economy and Finance, expressed in a written response submitted to Kwon Seong-dong, a member of the National Assembly's Planning and Finance Committee from the People Power Party, that he "agrees that the relocation will play an important role in promoting national balanced development."

During the debate, concerns were raised that the policy of having multiple financial hubs in Seoul and Busan is hindering the strengthening of international financial competitiveness. According to the Global Financial Centres Index (GFCI), an indicator used to evaluate international financial competitiveness, as of March, Seoul and Busan ranked 12th and 30th respectively, showing slight improvements but still lagging behind leading cities such as Hong Kong (3rd), Shanghai (4th), Beijing (8th), and Tokyo (9th).

Da-yeon Kang, a research fellow at the Financial Economy Research Institute who presented at the debate, pointed out that Seoul, the primary financial hub in Korea, has failed in selection and concentration due to the relocation of many policy financial institutions to other regions, while Busan, the secondary financial hub, lacks specialization strategies and internationality. Kang emphasized, "It is very important for the finance, insurance, and real estate industries to cluster in a way that forms markets and facilitates information exchange and transactions," adding, "Seoul has not established itself as an international financial center, and the overlapping designation with Busan is causing both to decline."

In the subsequent discussion, concerns were voiced about the potential deterioration of the Industrial Bank's competitiveness as a 'market-type policy financial institution' if it relocates to Busan. Although digital transformation (DT) is underway, the nature of the Industrial Bank's work requires networking with global financial institutions and client companies. Jo Yoon-seung, chairman of the Industrial Bank labor union, cited that in corporate finance, large-scale cooperative loans typically involve 46 face-to-face meetings over six months, emphasizing, "As a market-type policy financial institution that procures and supplies funds through competition, the Industrial Bank must have close collaboration and interest coordination capabilities with foreign investors, domestic financial institutions, and client companies."

Advice was also given that the new government should distinguish between 'pledges' and 'policies.' Wi Pyung-ryang, a research fellow at the Innovation Policy Network, stated, "Even if something is mentioned and announced as a pledge, it should be implemented as a policy based on comprehensive analysis and rational judgment, and if the opportunity cost cannot be borne, the pledge should be subject to reduction or abolition."

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