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.
Lenders on real estate selling spree amid uptake in digital banking services
The interior of a major bank's branch office in central Seoul is seen in this photo taken in 2016. Korea Times file
By Yi Whan-woo
By Yi Whan-woo
The country's four major banks are selling off their real estate, as offline banking services have been decreasing fast amid the acceleration of digital finance during the pandemic.
Most of the real estate that the four lenders ― KB Kookmin, Shinhan, Woori and Hana ― are selling are buildings and offices that were once used to house their branches. The banks are finding that such properties are no longer necessary as they are shutting down branches, and also because of the scarcity of tenants for them to rent the spaces to amid the economic recession.
“The offices that were built initially for banking purposes have a unique architectural design that makes it pretty tricky to be utilized for other business purposes,” a public relations representative of a bank said on condition of anonymity, Wednesday. “That makes it tough to rent out those offices and we therefore try to sell instead.”
According to the major banks, they have sold 72 properties combined since the start of the pandemic, about four times more than what they sold in the 2018-19 period.
By value, the 72 properties were worth 253.6 billion won altogether, compared to 114.2 billion for the real estate sold in the 2018-19 period.
Of the 72, 45 were sold for a total 142.7 billion won through auctions and other means of quick sales.
The selling spree hadn't slowed down this year, either.
KB Kookmin Bank has 12 properties worth 62.4 billion won up for auction this month, after selling 11 others for 41.3 billion won in 2021.
The 12 are spread out across the country, including a three-level building in Seoul's Gwanak District and a seven-story building in the southeastern city of Daegu.
Woori Bank sold four properties for a total 14.7 billion won in February, after selling five others for 9.8 billion won in 2021.
Data from the Financial Supervisory Service showed that the total number of branch offices for the four banks decreased by 38 to 3,525 between 2018 and 2019.
The decrease accelerated since then, marking 222 in the 2019-20 period and 224 in the 2020-21 period.
The number of their branch offices dwindled accordingly to 3,079 in 2021.
Sources familiar with the real estate market said that the selling spree will intensify, noting that the prices of offices peaked recently.
“The banks will want to minimize financial risks associated with their property,” a source said. “Selling the property is certainly helpful as they can cash in.”