[Issue] What Challenges Must Gwangju Bank Address Ahead of the Integrated Special City Treasury Selection?

No Branches in Three Jeonnam Counties... 12 Locations Closed in Four Years

March Loan-to-Deposit Rate Spread at 2.61%... 1.1 Percentage Points Higher than Major Banks' Average

"High-Interest Lending Weakens Social Responsibility and Erodes C

Gwangju Bank, aiming to become the first treasury operator for the newly established Jeonnam-Gwangju Integrated Special City, is being held back from being selected as the primary treasury institution due to its profit-driven business practices. Since 1969, the bank has served as the treasury for Gwangju City for 57 years, growing based on its regional presence. However, questions have been raised about its social responsibility as the bank has closed branches for profitability reasons and engaged in high-interest lending practices targeting local residents.

Gwangju Bank Building.

According to Gwangju City on May 20, Gwangju Bank submitted its proposal for operating the treasury of the integrated special city on May 8. Gwangju City and South Jeolla Province will finalize the operator for the primary treasury (general accounting) and the secondary treasury (special accounting) through a Treasury Selection Committee review on May 22.

The issue is that, ahead of the selection for the first treasury operator of the Jeonnam-Gwangju Integrated Special City, the bank has continuously reduced the number of branches in pursuit of better performance.

Currently, Gwangju Bank does not have branches in three counties among the 22 cities and counties of South Jeolla Province: Gokseong, Gurye, and Jindo. Since the primary treasury operator must also handle the issuance of regional development fund bonds, additional branches or financial supplementation in these three locations is necessary.

Furthermore, according to Gwangju Bank’s business report and other materials, the number of its branches in the Gwangju and South Jeolla region decreased from 111 (71 in Gwangju and 40 in South Jeolla) in 2021 to 99 (65 in Gwangju and 34 in South Jeolla) last year. There are no plans to open new branches this year.

During this period, the number of automated teller machines (ATMs) also saw a significant reduction, decreasing from 573 in 2021 to 503 last year, a drop of 70 units.

In 2021, Gwangju Bank recorded total deposits (KRW-denominated deposits) of 21.7454 trillion won, with the average deposit per domestic branch reaching 174.5 billion won. Similarly, last year’s total deposits (KRW-denominated) stood at 24.7006 trillion won, and the average deposit per domestic branch increased to 242.1 billion won.

While total deposits rose by 13.5%, the sharp reduction in branch numbers resulted in a 38.7% increase in average deposits per branch.

High-interest lending practices targeting local residents have also sparked controversy.

As of March this year, Gwangju Bank’s loan-to-deposit interest rate spread (loan interest rate minus deposit interest rate) stood at 2.61%, which is 1.1 percentage points higher than the average of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup), which posted 1.51%. This figure ranks third among 19 banks nationwide, following Toss Bank (3.68%) and Jeonbuk Bank (3.05%).

Since its first public disclosure in July 2022, Gwangju Bank’s interest rate spread has consistently exceeded 2.5%. The loan-to-deposit ratio has also steadily increased, from 97.8% in 2021 to 99% in 2025.

There is growing criticism that such high-interest lending structures targeting local residents are weakening the bank’s fulfillment of its social responsibilities. If excessive profits are prioritized, the relationship of trust with the local community could collapse.

A Gwangju Bank official stated, "We are reviewing supplementary measures from multiple perspectives."

Meanwhile, Gwangju City and South Jeolla Province will hold the Treasury Selection Committee on May 22 to determine the first treasury operator for the integrated special city. The committee will select the operators for the primary and secondary treasuries through both quantitative and qualitative evaluations, in accordance with relevant ordinances.

The selection of the first treasury operator for the integrated special city will be made through a limited competitive contract, with the operating period set from July 1 to December 31 of this year, totaling six months. From 2027 onward, treasury operators will be selected again through an open competition process, as stipulated by the Local Accounting Act and treasury designation standards for local governments.

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