FSC's relocation to Sejong stirs unease across financial industry
Employees are seen at the corridor of the Financial Services Commission at Government Complex Seoul, Sept. 9, 2025. Korea Times photo by Hong In-ki
Banks express concerns over potential disruption in coordination with financial regulators
The Financial Services Commission’s (FSC) planned relocation to the administrative city of Sejong next year is raising concerns across the financial industry about potential disruptions to communication with regulators and the resulting operational inefficiencies, industry officials said Thursday.
Industry officials are particularly concerned that the move could make it harder for banks and securities firms, most of which are headquartered in Seoul, to consult financial authorities on regulatory matters.
The country's top financial regulator, currently based in Seoul, plans to move to Sejong, about 110 kilometers to the south, in the second half of 2027. The move is part of a broader government plan to relocate 44 central government agencies and affiliated bodies from the Seoul metropolitan area to Sejong between 2027 and 2031, aiming to decentralize functions concentrated in the capital area and promote regional growth.
Banks are weighing how to adapt, with some expecting to rely more heavily on remote communication.
"We expect to establish ways to respond, including expanding the use of remote channels, to minimize any gaps in our operations," a Seoul-based commercial bank official said.
"We have yet to establish specific measures in response to the FSC's relocation, but we would consider adjusting our government relations practices if it causes operational inconvenience or delays in responding to pressing issues," another bank official said.
Beyond the time and expense of traveling to Sejong by KTX high-speed train, the bigger concern is whether banks will be able to coordinate with regulators as quickly during emergencies.
For instance, recent suspected artificial intelligence-assisted cyberattacks that affected more than a dozen financial institutions have underscored the need for swift communication between banks and regulators.
Remote communication has its limits, as some sensitive issues may be difficult to discuss over video calls due to security concerns, industry officials said.
Government buildings are seen at Government Complex Sejong, Tuesday. Yonhap
With the FSC's relocation now confirmed, attention is also turning to the future of the Financial Supervisory Service (FSS), which is headquartered in Yeouido, Seoul.
The FSS is responsible for inspecting financial institutions, imposing sanctions and helping address financial market instability.
The watchdog has not been included in the relocation plan announced on Tuesday. The interior ministry noted the possibility of moving the FSS would be reviewed separately as part of the second phase of public institution relocations, which it plans to announce in the coming months.
"The relocation of public institutions is a matter for the relevant government ministries to decide, so we have no particular position on the matter. However, we are closely monitoring developments ahead of the government's planned announcement on the next round of relocation list in the fourth quarter," an FSS official said.
The prospect of relocation has already drawn strong opposition from the FSS labor union. In September, the union submitted a petition to President Lee Jae Myung warning that moving financial institutions apart could undermine coordination.
"Separating private financial companies, policy lenders and financial regulators that need to operate like a single organism would weaken communication, which is needed to swiftly detect subtle changes in market conditions," the union said.
The FSS is not the only financial institution whose future location is under scrutiny.
State-run lenders, including the Industrial Bank of Korea, the Export-Import Bank of Korea and the Korea Development Bank, are also closely watching developments amid expectations that opposition from their labor unions could intensify.
The Korea Financial Industry Union (KFIU), a major umbrella labor group representing workers across the financial sector, has expressed strong opposition to the potential relocation.
"A policy that undermines the country's hard-won financial competitiveness for administrative convenience cannot be justified," the group said in a statement Wednesday.
Concerns about relocation of financial institutions have also emerged within the ruling Democratic Party of Korea (DPK).
Rep. Lee Un-ju of the DPK criticized the plan, arguing that dispersing financial policymaking and supervisory institutions could delay decision-making.
"Finance is a clustering industry whose competitiveness grows when information, capital, professional talent, companies and investors are closely connected ... Balanced regional development should not come at the expense of the country's financial competitiveness," Lee wrote on Facebook.