Legislation Proposed to Relocate Gi-eun, Su-eun, and Yebo to Busan... Union Opposition Expected

Seongkwon Lee, People Power Party Lawmaker
Proposes Package Bill for 'Relocation of National Financial Institutions to Busan'
Financial Labor Union Chairman "Strong Opposition Planned"

A bill has been proposed to relocate three policy financial institutions, including KDB Industrial Bank and IBK Industrial Bank, to Busan. The National Financial Industry Labor Union, which represents about 90,000 members, has expressed its intention to block this move. In particular, there are concerns that if the headquarters of IBK Industrial Bank, a publicly listed company, is moved to a provincial area, it could lead to shareholder value impairment issues.

Lee Seong-gwon, a member of the People Power Party (Busan Saha-gap), proposed a bill on the 19th to establish the headquarters of the Export-Import Bank of Korea, IBK Industrial Bank, and the Korea Deposit Insurance Corporation in Busan. All three bills were co-sponsored by People Power Party lawmakers representing Busan constituencies. Lee stated that since Busan was designated as a financial hub in 2009 and many financial institutions have relocated there, more prominent financial institutions should proactively move to create a financial ecosystem. Currently, the Export-Import Bank and IBK Industrial Bank, along with the Industrial Bank which is pushing for relocation to Busan, are required by law to keep their headquarters in Seoul. Only by amending the law can their headquarters be moved to Busan. Previously, a bill related to the Industrial Bank’s relocation to Busan was also resubmitted. Park Soo-young, a People Power Party lawmaker, took the lead in proposing a partial amendment to the Korea Industrial Bank Act. Until last year, the government completed administrative procedures such as public institution designation notices for the Industrial Bank’s move to Busan. Although four amendment bills to the Industrial Bank Act were proposed in the last National Assembly, all were discarded.

The Korean Federation of Trade Unions’ National Financial Industry Labor Union has declared its intention to oppose this. Kim Hyung-seon, the IBK Industrial Bank branch chief who was re-elected as chairman on the 19th, told this publication, “Financial centers like London or New York benefit from the agglomeration effect of financial institutions, so dividing these industries raises questions.” He added, “Relocating to provinces indiscriminately without considering the characteristics of the financial industry is harmful to the national and public economy, so we plan to strongly oppose it.”

IBK Industrial Bank and the Export-Import Bank have maintained a stance opposing relocation to provinces even before the bills were proposed. There have been ongoing efforts to relocate during the 21st National Assembly and earlier. During the 21st National Assembly, lawmaker Hwang Un-ha proposed an amendment to move IBK Industrial Bank’s headquarters to Daejeon. There was also a proposal to move it to Daegu. Under the leadership of Daegu Mayor Hong Jun-pyo, a task force was formed to attract IBK Industrial Bank, and support was requested from the People Power Party leadership. Kim Sung-tae, president of IBK Industrial Bank, said at last year’s National Assembly audit by the Political Affairs Committee, “About 66.5% of IBK Industrial Bank’s SME loans are in the metropolitan area, so SMEs need support on-site,” adding, “Moving the headquarters to a provincial area raises concerns from the perspective of SME support.” Yoon Hee-sung, president of the Export-Import Bank, also stated early last year, “The Export-Import Bank acts like the Ministry of Foreign Affairs for finance,” and “There is no country where the Ministry of Foreign Affairs is not located in the capital.”

Regarding IBK Industrial Bank, the recently released “2023 National Assembly Audit Results and Follow-up Report” stated, “So far, there has been no internal or external promotion or discussion about relocating the headquarters to provinces, and it should be carefully reviewed through comprehensive discussions with the National Assembly and government from various perspectives.” However, it also noted concerns about “difficulties in supporting SMEs on-site, decline in bank competitiveness, and shareholder value impairment.” It emphasized the need to consider that over 60% of SMEs are concentrated in the metropolitan area and that relocating the headquarters could hinder access to metropolitan financial infrastructure.

IBK Industrial Bank is the only listed policy bank, and there are concerns that relocating it to a province could constitute criminal breach of trust. Kim, the branch chief, said, “If the management decides to relocate IBK Industrial Bank to provinces in a way that damages shareholder value and lowers corporate value, it could be considered breach of trust.” As of the end of last year, general shareholders accounted for 31.46% and foreign shareholders 14.21% of IBK Industrial Bank’s shares. While the government can bear losses and take responsibility for relocating the headquarters of the Industrial Bank or Export-Import Bank as a policy measure, IBK Industrial Bank must also consider private interests, so shareholder opposition may arise.

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