Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Chungcheong provinces hopeful of establishing regional bank
The signboard of the now-dissolved Chungchong Bank is seen in this photo taken in 1991, seven years before it was shut down as part of a massive restructuring drive prompted by the Asian Financial Crisis. Korea Times file
By Yi Whan-woo
By Yi Whan-woo
The country's central provinces of Chungcheong are apparently encouraged by President-elect Yoon Suk-yeol's push to foster the banking industry outside of Seoul, after 24 years of being the only regions in the country with no provincial bank of their own.
The president-elect has been calling for moving state-run banks out of the nation's capital, with a special interest in the relocation of Korea Development Bank (KDB) to Busan, in the name of balanced regional development.
The pledge does not explicitly mean Yoon will set up a new provincial banking brand committed to the regional economy and operating accordingly within the targeted region exclusively, in contrast to major banks.
Yet the residents of North and South Chungcheong provinces still find Yoon's pledge promising, believing it can eventually prompt the establishment of a regional banking brand, according to sources familiar with the matter, Monday.
More than 700 people participated in a campaign that began on March 25 to promote the opening of a provincial bank for the Chungcheong region.
Jointly led by South Chungcheong Province Governor Yang Seung-jo and Kongju National University President Won Sung-soo, the campaign involves politicians, professors, civil activists and bankers, both retired and active.
The members will collect 1 million signatures, attract investors, seek the support of regional media outlets and carry out other relevant campaigns to facilitate the establishment of a provincial bank.
People Power Party (PPP) Rep. Hong Moon-pyo, from South Chungcheong Province, is contributing to the campaign.
On March 23, he proposed a bill aimed at overhauling the country's banking laws to allow regional governments to fund more than 15 percent of the capital needed when setting up a bank in their jurisdiction.
The establishment of a regional bank currently requires 25 billion won ($20.3 million) worth of capital as a precondition, which private investors have found difficult to fully raise without assistance.
Under the circumstances, restricting the local government's support to 15 percent was seen as a barrier.
“Easing the private sector's burden and drawing out the regional government's support to a maximum level can raise the chances for a Chungcheong-based bank,” Rep. Hong said, adding he will push for the passage of the bill by the end of the year.
The Chungcheong provinces used to have a regional bank until June 1998, when it was closed as part of a massive restructuring drive prompted by the Asian Financial Crisis.
The two provinces combined are ranked third nationwide in terms of gross regional domestic product (GRDP), a measurement of a regional economy.
However, they are also ranked the highest when it comes to the rate of GRDP being spent outside the region. In 2019, 25 trillion won of South Chungcheong Province's GRDP worth 113.5 trillion won flowed out of the region.
Overall deposits in South Chungcheong Province accounted for 1.6 percent of deposits nationwide, while the region's borrowings accounted for 2.2 percent of the national total.