48 Trillion Seoul City Treasury Bid Deadline... Shinhan, Woori, Kookmin Banks' Strategies

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[Asia Economy Reporter Minwoo Lee] Shinhan Bank, Woori Bank, and KB Kookmin Bank have thrown their hats into the ring for the position of treasurer managing Seoul City's budget and funds, which amount to 48 trillion won annually. Shinhan Bank, the previous treasurer, is making every effort to 'retain' the position, while Woori Bank, which managed Seoul City's treasury for over 100 years in the past, is aiming to reclaim it. Adding to the competition, KB Kookmin Bank, boasting a stable financial structure, has also joined, making a fierce contest expected.

According to the financial industry on the 12th, Shinhan, Woori, and Kookmin Banks all applied by the deadline for the proposal submission for the designation of Seoul City treasury on the previous day. The three banks submitted bids for both the primary treasury, managing the city budget of 44.219 trillion won, and the secondary treasury, managing funds worth 3.5 trillion won. Currently, Shinhan Bank holds the primary treasury, and Woori Bank manages the secondary treasury.

Since excessive contribution fee competition among banks was criticized during the 2018 bidding, it is expected that this year they will approach with somewhat different strategies. In fact, the evaluation criteria have been adjusted. The score for cooperative project expenses (contribution fees) was lowered from 4 points to 2 points, while the score for loan and deposit interest rates to Seoul City increased from 18 points to 20 points. In the 'citizen convenience' category, which is worth 18 points, the evaluation indicators were expanded from the number of branches within the district to include the number of unmanned branches and ATM installations.

Since the score for treasury management capability is the highest at 28 points, Shinhan Bank and Woori Bank are expected to actively highlight their experience. Shinhan Bank is likely to emphasize the newly established IT system and four years of operational experience as the primary treasury bank. Woori Bank is also expected to present its over 100 years of treasury management experience and synergy with Seoul district treasuries, which hold a 72% market share.

In the convenience category, a fierce competition is anticipated between Woori Bank, which ranks first in the number of branches (344 locations), and Shinhan Bank, which leads in the number of ATM installations (2,094 units). KB Kookmin Bank is evaluated to have the capacity to offer strikingly high interest rates based on its stable financial structure. Given the reduced score for contribution fees, the city is also paying considerable attention to loan and deposit interest rates, which directly translate into revenue, suggesting that KB Kookmin Bank can demonstrate strong competitiveness.

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