Banks as 'General Election Tools'... Following KDB, KIC Proposes Bill for Regional Relocation

Ruling and opposition parties, ignoring Ki Eun, "Relocate to Daejeon" "Relocate to Daegu"
San-eun's relocation to Busan law also difficult to pass
Opposition within banks

With the general election scheduled for April next year, a bill to relocate Industrial Bank of Korea (IBK) was introduced in the previous National Assembly. While the relocation of Korea Development Bank (KDB) to Busan, a campaign pledge of President Yoon Suk-yeol, has come to a halt, bills to move national policy banks to local regions are emerging across both ruling and opposition parties as tools to gain voter support.

According to the financial sector on the 23rd, Hwang Un-ha, a member of the Democratic Party of Korea, proposed the 'Amendment to the Small and Medium Enterprise Bank Act' on the 20th, suggesting that IBK's headquarters be located in Daejeon Metropolitan City. The bill states, "With the exit of Chungcheong Bank in 1998 and Chungbuk Bank in 1999, the Chungcheong region has lacked a regional bank based on the local community for over 20 years," and argues that "relocation is necessary from the perspective of regional balanced development."

Daegu also wants to attract IBK's headquarters. The Daegu city government has formed a task force (TF) to promote the relocation. Hong Joon-pyo, mayor of Daegu, requested support for IBK's relocation to Daegu during a budget policy meeting with the People Power Party leadership in July. Yoon Jae-ok, leader of the People Power Party and representative of Daegu Dalseo District, had previously proposed an amendment to the Small and Medium Enterprise Bank Act in August 2020 to establish IBK's headquarters in Daegu.

IBK opposes the discussions on relocation being conducted in the political arena. The IBK labor union issued a statement titled "Do not put IBK on the political stage" on October 12. Kim Sung-tae, president of IBK, also stated at the National Assembly's Political Affairs Committee audit last month, "About 66.5% of IBK's SME loans are in the metropolitan area, so support for SMEs must be provided on-site," adding, "The issue of moving IBK's headquarters to a local region raises concerns from the perspective of SME support."

Although the issue of relocating banks to local regions has surfaced as a means to gain voter support ahead of the general election, its actual realization remains uncertain. The relocation of KDB's headquarters to Busan, a campaign pledge of President Yoon Suk-yeol, is also expected to be delayed beyond this year.

The National Assembly's Political Affairs Committee held a bill review subcommittee on the 21st to discuss an amendment to the Korea Development Bank Act that would revise the provision to keep KDB's headquarters in Seoul, but the bill failed to pass. Opposition lawmakers opposed the bill citing internal resistance within KDB.

Ahead of the general election, not only the relocation of national policy banks' headquarters but also the 'windfall tax' (Partial Amendment to the Act on the Protection of Financial Consumers) proposed by opposition parties have become points of controversy among banks.

The Political Affairs Committee plans to hold a bill subcommittee on the 28th to discuss the windfall tax.

Meanwhile, the 'Partial Amendment to the Act on the Governance of Financial Companies,' which includes provisions to create a 'responsibility structure chart' for executives to strengthen internal controls of financial holding companies, passed the Political Affairs Committee and the Judiciary Committee on the 21st. A Financial Services Commission official said, "This bill is expected to pass within the year at the earliest."

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