Fierce Competition for Safe Deposit Contracts... Four Major Banks Received Over 200 Billion KRW in Local Government Contributions Last Year

School and Hospital Contributions Near 70 Billion Won
Strongly Suggestive of Rebates... Criticism of 'Excessive Competition'

Last year, the four major commercial banks in South Korea spent over 200 billion won in contributions to local government treasuries. The amount contributed to universities and hospitals also approached 70 billion won, raising concerns about excessive competition surrounding treasury management.

According to the "Bank Management Status Disclosure Report" published on the 4th by the Korea Federation of Banks, the four major commercial banks?KB Kookmin, Shinhan, Hana, and Woori (NH Nonghyup Bank did not disclose)?spent 207.292 billion won on local government contributions last year. Shinhan Bank led with 121.72 billion won, followed by Woori Bank with 54.81 billion won, Kookmin Bank with 19.311 billion won, and Hana Bank with 11.451 billion won.

The scale of local government contributions by major banks has been increasing every year. According to the office of Yoon Chang-hyun, a member of the People Power Party, the contributions from the five major commercial banks including Nonghyup Bank to local governments rose from 258.6 billion won in 2019 to 262.2 billion won in 2020, and an estimated 278 billion won in 2021.

Contributions to schools and hospitals are also significant. The four major banks contributed a total of 66.058 billion won to schools and hospitals last year. Shinhan Bank again contributed the most with 25.068 billion won, followed by Woori Bank with 15.613 billion won, Kookmin Bank with 14.59 billion won, and Hana Bank with 10.787 billion won. Notably, contributions to schools amounted to 49.317 billion won, an increase of 15.1 billion won compared to the previous year (34.2 billion won).

Local government contributions (cooperative project funds) are a type of sponsorship money that banks return from investment profits earned by managing government grants, local taxes, and various funds, or offer during the selection process of local government treasury banks. Banks are eager to secure treasuries because it allows them to obtain large-scale funds at low cost and helps attract customers.

There are criticisms that this constitutes "excessive competition." It is seen as a kind of "rebate," providing excessive benefits to local governments. There are also concerns that this could be passed on to consumers as increased burdens, such as higher loan interest rates.

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