Members of the Korea Financial Industry Union march on Sejong-daero in Jongno-gu, Seoul, on Sept. 26 last year, during a general strike rally, calling for real wage increases and a 4.5-day workweek. Reporter Sung Hyung-joo
Opposition is mounting among South Korea’s financial state-run institutions after the country’s three main policy banks and the Korea Deposit Insurance Corporation were included in the government’s second round of planned relocations of public agencies. Analysts warn that spreading financial state-run institutions across regions in a piecemeal fashion would hurt global competitiveness and obstruct funding for high-tech industries.
The unions of the Korea Development Bank, the Industrial Bank of Korea (IBK) and the Export-Import Bank of Korea issued a joint statement on the 10th, calling the plan “an economic disaster that would shake the foundation of the funding ecosystem for the nation’s high-tech industries and small businesses by artificially splitting apart the heart of policy finance — which requires deep expertise and global and nationwide networks — and driving it into the provinces.”
The unions asked whether any country in the world had deliberately broken up its financial institutions. “When concentrating all financial capacity in a single city would still not be enough, how do they expect to compete with Hong Kong, London, New York, Shanghai and Tokyo by mechanically dispersing core financial institutions?” they said. They added that the Korea Development Bank is responsible for the National Growth Fund and the Advanced Strategic Industries Fund, on which the nation’s fortunes depend, while IBK handles policy finance for small and mid-sized enterprises and small business owners — the roots of the real economy — on the front lines. The Export-Import Bank drives the export sector and takes sole charge of the country’s economic security and financial diplomacy, they said.
The unions of the three banks plan to hold a “rally for all-out struggle to block regional relocation” after work hours on the 11th in Yeouido, Seoul. About 2,000 people are expected to gather, with Rep. Kim Hyun-jung of the Democratic Party of Korea and Rep. Han Chang-min of the Social Democratic Party, both members of the National Assembly’s National Policy Committee, in attendance. Busan, Daejeon, Jeonju and Naju have been mentioned as candidate sites for the banks’ relocation, with a plan to spread them across several regions rather than a single location under discussion.
The union of the Korea Deposit Insurance Corporation, which has been rumored for relocation to Sejong, will also hold a policy forum on the 11th to state its opposition to the move. Drawing on research by the law firm LIN and professors Lee Sang-hoon of Kyungpook National University and Jeon Seon-ae of Chung-Ang University, the union plans to argue that Seoul — dense with financial institutions such as banks and securities firms — is the optimal location for carrying out financial stability functions.
The financial state-run institutions are also concerned about an exodus of talented staff. At the Korea Development Bank, the number of voluntary resignations was 97 in 2022 and 87 in 2023, when discussions about relocating its headquarters to Busan were underway. That was more than double the 37 and 46 voluntary resignations recorded in 2020 and 2021. The bank’s union said it estimates that 20% to 30% of the total workforce would resign if relocation becomes a reality.
In a June survey of 740 current employees by the deposit insurer’s union, only 12% of those with less than five years of service and 13% of those with five to less than 10 years said they intended to keep working if the institution relocated.
The financial state-run institutions plan to use all available means, including a general strike and litigation, if the government does not halt its review of relocation. In particular, they believe there is room to contest the relocation legally, given that the “yellow envelope law” — a revision to Articles 2 and 3 of the Trade Union Act — added “management decisions affecting working conditions” to the scope of labor disputes. One union chairman said the relocation discussions were “so highly classified they resembled a military operation,” adding that it was hard to accept relocation talks conducted without any consideration for individual employees.