[1mm Geumyung Talk] Do You Know 'Election Bank Accounts'... Already 30 Years, Spotlight During General Election Season

With the 22nd National Assembly elections just over 40 days away, banks are attracting attention by launching demand deposit products targeted at election candidates. While it is an opportunity to attract election funds worth around 100 billion KRW, banks explain that the practical benefits are not significant and the purpose is more public-spirited.

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According to the financial sector on the 27th, BNK Busan Bank launched the 'Dangseon Dream (Dream) Account,' a demand deposit product for election candidates and others, the day before. This is a renewed version of Busan Bank's existing 'Election Expense Management Account,' which was first launched in 2006 and has provided fee exemption benefits during every election for 17 years, now newly introduced as the Dangseon Dream Account.

This product is targeted at the election candidate themselves, the accounting officer designated by the candidate, the candidate's support committee, and the city/county/district election commission, and accounts can be opened through branch counters. It also offers benefits such as exemption from various fees until May 10, one month after the election day (April 10).

Busan Bank is not the only one launching election-related products. BNK Gyeongnam Bank, a sister bank of Busan Bank, introduced a similar election product called 'Dangseon Account,' DGB Daegu Bank offers the 'DGB Dangseon Account,' and Gwangju Bank has the 'Dangseon Giwon (Wish for Victory) Account.' These products also feature various fee exemption benefits.

Major commercial banks also have similar products. KB Kookmin Bank is selling the 'Dangseon Account' until April 9. It features fee exemptions for electronic financial transfer fees and issuance fees for transaction statements and balance certificates submitted to the election commission until June 9. Shinhan Bank has been selling the 'Hanmaeum Dangseon Giwon Account' since early this year, while Woori Bank and NH Nonghyup Bank operate the 'Dangseon Giwon Account' and 'Oh~ Pilseung (Oh~ Victory) Account,' respectively.

The primary reason banks regularly release demand deposit products for candidates during election seasons is to attract deposits. According to the Central Election Commission, in the 21st National Assembly election held in 2020, there were 1,118 candidates for 253 constituencies, and the total election expenses amounted to about 111.6 billion KRW. The average amount per person was about 99.83 million KRW (with an average election expense limit of 182 million KRW). This means that banks could secure over 100 billion KRW in low-cost deposits over several months during the election period. Considering that as of the previous day there are 51 registered political parties and 15 party formation committees, and the average election expense limit for this election is 218 million KRW, the volume could be even larger.

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However, it is generally assessed that attracting deposits is not the main purpose of operating election-related products. According to the Bank of Korea, the balance of demand deposits at domestic deposit banks stood at 322.9621 trillion KRW at the end of last year. Given the nature of election funds, which require significant cash flow in a relatively short period around the election and bookkeeping for election authority reporting afterward, it is difficult for these products to be a meaningful means of attracting deposits. For this reason, some banks do not operate separate election-related products.

Election accounts first appeared in the 1990s. Ahead of the first nationwide local elections in 1995, the revised 'Public Official Election and Prevention of Election Fraud Act' (currently the Public Official Election Act) stipulated that when political parties or candidates appoint and report accounting officers, they must open deposit accounts for election income and expenses at financial institutions located in the main business area of the election office or contact office, and all election income and expenses must be handled through these accounts.

Since then, several commercial and regional banks, led by Kookmin Bank (now KB Kookmin Bank), have introduced such products. However, even then, the practical benefits gained by banks were reportedly not significant. This is due to the nature of election funds. The public interest purpose of supporting fair elections was greater than practical benefits.

Therefore, the industry explains that the additional purposes, such as strengthening the bank's status within the local community by attracting election fund accounts of prospective lawmakers and attracting support committee accounts, are more significant than deposit attraction. A banking industry official said, "Considering the nature and scale of election funds, the practical benefits gained from attracting election funds are not large," adding, "It can be seen as supporting smooth election operations." Another bank official added, "In regions like Yeongnam and Honam, where regional banks hold significant status, the symbolic meaning is likely greater than practical benefits."

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