[1mm Financial Talk] 'Busan-bound Officialization' San-eun, 'Restless' Policy Financial Institution

Worried Whether the Mountain Will Follow

[Image source=Yonhap News]

"We just hope not to get caught in the (political) radar."

As the relocation of Korea Development Bank (KDB) to Busan gains momentum, policy finance institutions remaining in Seoul are becoming tense. With the government's second wave of public institution relocations and next year's parliamentary elections approaching, each metropolitan local government is starting a competition to attract policy finance institutions. The financial sector believes internal conflicts within each institution could deepen over this issue.

According to the financial sector on the 4th, the National Financial Industry Labor Union held a "Press Conference Condemning the Yoon Suk-yeol Government's Unilateral Designation of KDB Relocation" in front of Seoul City Hall in Jung-gu, Seoul, that morning. This was in response to the Ministry of Land, Infrastructure and Transport officially designating and announcing KDB as a public institution to be relocated to Busan the day before.

The KDB union stated in a press release, "How can an institution legally mandated to have its headquarters in Seoul be relocated to Busan without amending the law?" and urged, "President Yoon Suk-yeol must immediately stop illegal administration and create a forum for dialogue to discuss the KDB relocation."

Despite the union's opposition that amending the current law (Article 4 of the Korea Development Bank Act), which stipulates the headquarters be in Seoul, should come first, the financial sector expects the Busan relocation to proceed rapidly. This is because it was a campaign pledge of President Yoon and the general election is less than a year away. KDB plans to prepare a relocation plan and submit it to the Financial Services Commission for approval within the year once the ongoing "KDB Policy Finance Development Direction Consulting" results are finalized.

As the KDB relocation gains traction, policy finance institutions remaining in Seoul are becoming uneasy. The government plans to designate the second wave of public institutions for relocation within the first half of the year. Notably, the Ministry of Land, Infrastructure and Transport recently revealed in a full session of the National Assembly Land, Infrastructure and Transport Committee that the number of public institutions subject to relocation could reach around 500.

An official from a policy finance institution based in Seoul said, "There is no relocation discussion concerning our institution yet, but internally there is constant anxiety," adding, "Many young employees were born and raised in the metropolitan area and joined because the institution is located in Seoul, so it is natural they would oppose any relocation talks."

Referring to KDB's case, local governments are starting public opinion campaigns to attract policy finance institutions to their regions. In Busan, which is focusing on attracting KDB, local civil society groups argue that to develop Busan as a "financial hub," additional relocations of institutions such as the Export-Import Bank of Korea, Industrial Bank of Korea, Korea Deposit Insurance Corporation, and Korea Inclusive Finance Agency are necessary.

In Gangwon Province, Governor Kim Jin-tae has advocated for attracting the Bank of Korea, and relocations of the Financial Supervisory Service and Korea Finance Corporation are also being considered. In the Honam region (Gwangju, Jeonnam, Jeonbuk), relocation discussions include the National Agricultural Cooperative Federation, National Federation of Fisheries Cooperatives, Nonghyup Bank, and Suhyup Bank, reflecting regional characteristics.

Of course, major policy finance institutions including KDB are often legally required to have their headquarters or main offices in Seoul according to their founding laws, so the National Assembly, where the ruling party does not hold a majority, remains a hurdle. KDB, as well as the Export-Import Bank and Korea Finance Corporation, are legally mandated to have their headquarters in Seoul. The opposition party maintains that legal amendments should precede any relocation of KDB. However, since the opposition party must consider regional voter sentiment in next year's general election, the prevailing interpretation is that it will be difficult to oppose the relocation in the mid to long term. The opposition also mentioned regional balanced development and public institution relocation during the presidential election campaign.

While there is strong advocacy for assessing the validity and expected effects before relocation, the perception gap between parties involved is significant. A senior official from a policy finance institution that relocated to a province said, "After coming down, it is true that the region's population decline and economic recession are more severe than expected," adding, "While it is important to evaluate the validity and ripple effects of relocation, in regions facing imminent extinction, such discussions do not resonate in reality."

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