[Issue] Gwangju Bank Competes for Integrated Special City’s Primary Treasury... Local Sponsorship Details Remain Confidential

Decision to Be Made by Treasury Selection Committee on May 22

Head-to-Head Contest Between Gwangju Bank and NH Nonghyup Bank

Social Contribution Activities Quietly Overlooked in Selection Criteria

Public Opinion: “Community Return Sho

With the decision on the selection of the first treasury operator for the Jeonnam-Gwangju Unified Special City, which will be launched in July, set for the 22nd, this has emerged as the biggest issue in the local financial sector. However, the atmosphere among local residents observing the process remains distinctly cold.

On the surface, Gwangju Bank and NH Nonghyup Bank are in a formal competition, with Gwangju Bank staking everything on winning the treasury contract under the banner of being the "local bank." However, even local residents are raising doubts about how much the bank has actually contributed to the local community.

This is the reason why, both within and outside the local community, there is growing debate about whether it is truly appropriate for Gwangju Bank to continue holding the No. 1 treasury position for the unified special city solely based on its decades-old "local bank premium."

Exterior view of Jeonnam Nonghyup Jeonnam Provincial Government Branch (left in the photo) and Gwangju Bank Gwangju City Hall Branch. Photo by Jinseok Sim and Chanki Min

From its first year, the Jeonnam-Gwangju Unified Special City will effectively manage a massive budget of 25 to 26 trillion won. This is because the combined budgets of Gwangju City (8.1 trillion won) and Jeonnam Province (12.7 trillion won) amount to 20.8 trillion won, with an additional 5 trillion won per year in special government support. This marks an unprecedented scale for a local government.

However, this treasury selection is not a "permanent contract" but rather a temporary arrangement. Gwangju City and Jeonnam Province have decided to select either Gwangju Bank or Nonghyup Bank as the treasury operator for the unified special city for a six-month period, from July 1 to December 31 this year, in consideration of the different existing treasury contract terms. This is essentially a provisional system to minimize confusion in the early stages of the special city's launch.

The treasury selection for 2027 is expected to proceed as early as October this year, following the enactment of related ordinances after the launch of the special city.

The treasury operator for the unified special city, which will be managed on a temporary basis for six months, will be decided on the 22nd by the Treasury Selection Review Committee. The committee reportedly consists of a total of 11 members: 5 recommended by Gwangju City, 5 by Jeonnam Province, and 1 jointly recommended by both city and province.

Nevertheless, in the financial sector, it is anticipated that whichever bank is selected as the No. 1 treasury operator this time will gain a significant advantage in next year's full-scale "unified special city treasury selection." While it is likely that the pool of participants will expand to include major commercial banks, this is not expected to have a major impact on the outcome.

Consequently, there are already growing calls questioning whether it is fair for Gwangju Bank to continue to hold the No. 1 treasury status in the new Jeonnam-Gwangju Unified Special City as it does now.

Gwangju Bank has maintained a stable profit structure in recent years, posting net profits exceeding 200 billion won annually. At the same time, however, criticism has been mounting in the region that "the role of local banks has weakened as the local economy has struggled."

The high loan-deposit interest rate spread has become a focal point of controversy.

Among local banks, Gwangju Bank has consistently posted one of the highest loan-deposit spreads.

According to the Korea Federation of Banks, as of March this year, Gwangju Bank's loan-deposit spread (loan rate minus deposit 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 stood at 1.51%. This ranks third among 19 banks nationwide, after Toss Bank (3.68%) and Jeonbuk Bank (3.05%).

Since its first disclosure in July 2022, Gwangju Bank's loan-deposit spread has remained above 2.5%. Its loan-to-deposit ratio has also steadily increased from 97.8% in 2021 to 99% projected for 2025.

The fact that such a high loan-deposit spread has persisted for several years is seen as especially problematic.

This can be interpreted to mean that local residents using Gwangju Bank have borne higher financial costs as a result.

This aligns with complaints among local small and medium-sized businesses and self-employed individuals that "financial support is lacking."

Conversely, perceptions of Gwangju Bank's social contribution activities are at an all-time low.

Although Gwangju Bank continues to engage in scholarship programs, sports sponsorships, and support for local events on the surface, these efforts are seen as falling short of long-term investments or support for the local industrial ecosystem that could transform the local economy.

Some in the local business community even say, "There are plenty of event sponsorships, but the bank has little presence in investing in the region's future industries."

When The Asia Business Daily requested disclosure of Gwangju Bank's local sponsorship records, the bank made it clear that these items are "confidential" and refused. In effect, the bank dismissed the request to review its local contributions by citing confidentiality as an excuse.

A local business figure criticized, "Local residents' disappointment with Gwangju Bank is nothing new. Of course, it is understandable that the bank prioritizes its own survival, but as a local bank, it should also show a degree of commitment to the community commensurate with its privileged status. If it has failed to do so, Gwangju Bank should certainly be held accountable."

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