Plan to relocate financial regulators, state-run banks outside Seoul faces backlash
The proposal would put distance between regulators and the institutions they oversee while also leading to the mass resignation of skilled professionals.
The Financial Supervisory Service headquarters in Yeouido, western Seoul is seen on Aug. 15, 2022.NEWS1
A government plan to relocate Korea’s top financial regulators and state-run banks outside Seoul is facing mounting opposition over concerns that the move could disrupt financial oversight and prompt an exodus of skilled employees.
The government is considering relocating the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) from Seoul to Sejong — Korea’s administrative city about 130 kilometers (81 miles) south of Seoul. State-run lenders, including the Korea Development Bank (KDB), the Industrial Bank of Korea (IBK) and the Export-Import Bank of Korea (Exim Bank), are also being considered for relocation to other areas outside the capital region.
The FSC, FSS and state-run banks have emerged as likely candidates as the government pushes to relocate central administrative agencies and a group of public institutions outside the capital region, according to financial industry sources Wednesday.
While neither the institutions to be relocated nor their destinations have been finalized, the prospect has already drawn strong opposition from employees and raised concerns within the financial sector. With nine in 10 financial companies headquartered in the greater Seoul area, critics say moving key regulators could create inefficiencies by putting greater physical distance between them and the institutions they oversee.
The FSS has conducted or plans to conduct 707 inspections of financial companies this year with a cumulative 28,229 personnel. Meanwhile, 91.6 percent of financial companies’ headquarters and 88.3 percent of institutions subject to on-site inspections are located in the greater Seoul area.
“Having a construction site supervisor leave the site goes against common sense,” FSS Gov. Lee Chan-jin said in June, referring to speculation over the agency’s relocation.
Financial Supervisory Service Gov. Lee Chan-jin speaks during a press conference in western Seoul on June 22.NEWS1
Concerns have also been raised that relocating the FSS could make it less accessible to financial consumers, as its consumer service center in Yeouido, western Seoul, receives about 75,000 visitors a year.
Another major concern is a potential exodus of specialized personnel.
“A significant portion of our work force consists of professionals such as accountants and lawyers, and quite a few would probably rather find another job in Seoul than move to Sejong,” an FSS official said.
Similar concerns reverberate through the state-run banks.
“People with experience in the financial sector have plenty of options in Seoul,” an official at a state-run bank said. “If relocation is decided, many will consider changing jobs.”
Internal opposition has also intensified. Unions at the FSS and the KDB issued statements opposing any move on Monday and Tuesday, respectively. Unions representing the KDB, IBK and Exim Bank also held a joint rally on Aug. 11.
“Seoul ranking No. 8 among 137 cities worldwide in the Global Financial Centres Index in the first half of this year shows just how important the benefits of clustering are to the financial industry,” Yoon Seok-gu, the head of the Korean Financial Industry Union, said at a press conference Tuesday.
Union members from the Korea Development Bank (KDB), the Industrial Bank of Korea and the Export-Import Bank of Korea chant slogans during a joint rally against the proposed relocation of the state-run banks outside Seoul in front of KDB headquarters in Yeouido, western Seoul, on Aug. 11.YONHAP
The union has also announced plans for a general strike on Sept. 4.
The labor group representing the National Agricultural Cooperative Federation, or NongHyup, which has also been in the discussion about relocation, plans to hold a march and rally Friday.
A move could, however, bring some benefits. Moving the FSC and FSS to Sejong would put them closer to the Ministry of Economy and Finance, potentially making policy coordination easier. The relocation of financial institutions could also serve as an opportunity to develop regional financial ecosystems.
“What matters is how to create synergies after the relocation by bringing related financial functions together and linking them with private financial companies and local universities to build a network among industry, government and academia rather than dispersing institutions, as was done in the first round of public institution relocations,” Lee Min-hwan, a professor of global finance at Inha University, said.
Meanwhile, efforts to designate North Jeolla as Korea’s “third financial hub” are gaining momentum. The FSC convened the financial hub promotion committee on Wednesday to review an evaluation plan for the designation.
The commission plans to hold additional meetings within the year before making a decision.
The Ministry of Land, Infrastructure and Transport, which oversees the relocation of public institutions, is also participating in the discussions, the FSC said.
The decision on North Jeolla’s designation could ultimately be tied to broader discussions on moving financial institutions.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
