Seoul Gugeumgo Battle Nears End... KB Expected to Make Significant Gains

Announcement of Gwangjin and Dongdaemun-gu Treasury Operation Rights on the 25th
KB Advances... Strengthening Corporate Sales
Woori Bank Maintains Majority but Decline Inevitable Compared to Before

[Asia Economy Reporter Minwoo Lee] The battle for district treasury accounts in Seoul is reaching its final stages. KB Kookmin Bank has made significant strides by securing several areas previously held by Woori Bank, a traditional powerhouse. Although Woori Bank maintained a majority, it has conceded many district treasury operation rights following the city treasury accounts.

According to industry sources on the 25th, the operation rights for the treasuries of Gwangjin-gu and Dongdaemun-gu will be announced on this day. This will mark the conclusion of the competition for the operation rights of the 25 autonomous districts’ treasuries in Seoul, valued at approximately 16 trillion won. The banks selected this time will operate the district treasuries for four years starting next year.

This year, KB Kookmin Bank’s progress is particularly notable. It has won the treasury competitions in Dobong-gu and Dongjak-gu, areas that were previously Woori Bank’s territory. If it successfully defends the Gwangjin-gu treasury it currently operates and wins the Dongdaemun-gu treasury competition, KB Kookmin Bank will secure a total of six district treasury operation rights, including the No. 1 and No. 2 treasuries in Nowon-gu. This would double its current holdings from three to six.

Industry insiders have noted that KB Kookmin Bank has taken an especially aggressive approach. A representative from a commercial bank said, “KB Kookmin Bank offered contributions in the range of 12 to 14 billion won for Dobong-gu and Dongjak-gu, showing a more aggressive stance than other banks,” adding, “It is also reported internally that there is a strong will to strengthen institutional sales.”

KB Kookmin Bank’s vigorous efforts to secure district treasuries reflect a sense of urgency that it cannot remain confined to retail banking alone. Although it has been a strong player in retail finance, concerns over deteriorating performance have arisen due to government household loan regulations and competition in regular savings and time deposits interest rates, which have led to the outflow of low-cost funds. According to securities analysts’ consensus forecasts, among the four major financial groups?KB, Shinhan, Hana, and Woori?only KB Financial Group is expected to experience negative growth compared to the same period last year. Consequently, it is anticipated to lose its position as the ‘No. 1 financial group’ to Shinhan Financial Group. Since financial groups heavily rely on bank interest income, KB’s net interest margin (NIM) improvement is expected to lag behind Shinhan Bank. As of the second quarter of this year, KB’s proportion of low-cost deposits was 53.1%, higher than Shinhan Bank’s 46.7% and Hana Bank’s 39.6%, suggesting that the impact of fund outflows from regular savings and time deposits amid the interest rate hike rally will be the greatest for KB.

Shinhan Bank, which secured the Seoul city treasury, currently holds the treasury accounts for eight districts: Gangbuk, Seongdong, Gangnam (No. 1 and No. 2), Seocho (No. 1 and No. 2), Eunpyeong, and Guro. It acquired the treasuries of Eunpyeong, Guro, Seocho, and Gangnam-gu (No. 2), previously managed by Woori Bank, but lost the Yongsan-gu treasury, which it had held for 12 years, back to Woori Bank.

Woori Bank, which once operated all 25 district treasuries, has secured operation rights for 17 districts to date. Although it maintains a majority among the total 31 districts, even if it wins the treasury competitions for Gwangjin-gu and Dongdaemun-gu on this day, it is confirmed that this number will decrease from the previous 20. A representative from a commercial bank commented, “It seems to be a difficult period both inside and outside this year,” adding, “If the number of operated district treasuries decreases, the number of branches in those districts will also decline, which is causing some disappointment among the staff.”

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