Provincial administrations race to attract IBK relocation

Industrial Bank of Korea (IBK) headquarters in central Seoul / Courtesy of IBK

As the Korea Development Bank (KDB) contemplates relocating to Busan, various provincial administrations are vying to attract the Industrial Bank of Korea (IBK) to their regions. They anticipate that the bank might be included in the second phase of relocations, in line with the government's policy to decentralize state-run institutions from Seoul.

Of all the contenders, Daegu has been the most proactive. The city has singled out IBK as its foremost choice from the 23 public institutions it aspires to host and established a specialized task force. In July, Daegu Mayor Hong Joon-pyo even made a formal request to the leadership of the ruling People Power Party for the bank's relocation to Daegu.

"Small and medium-sized corporations constitute 99 percent of all businesses in Daegu. This aligns perfectly with the foundational objectives of IBK," a Daegu City official said.

Busan asserts that for the region to truly transform into a financial hub, all policy financial institutions, including IBK, should contemplate relocating in the wake of KDB's move. Daejeon also stepped forward, emphasizing its lack of a dedicated regional bank. Through this, they underline the importance of hosting a bank centered on corporate finance for the central Chungcheong Province region.

South Gyeongsang Province touts its high concentration of small and medium-sized enterprises as an advantage, while Wanju County in North Jeolla Province emphasizes that the commitment to recognize the southwestern Jeolla region as the nation's third financial hub had been a presidential promise.

The eagerness of local governments to attract IBK stems primarily from the potential for a significant boost to their local economy. By attracting the state-run bank, they can reap substantial benefits, including a surge in local tax revenue and notable job creation.

The initial challenge lies in being chosen by the Ministry of Land, Infrastructure and Transport for the second round of relocations. While the list for these relocations was initially set to expand from 365 places to over 500, the announcement has been deferred until after next year's general election, due to concerns about excessive competition.

A legal amendment is also required since the relevant act specifies IBK's location as Seoul.

The labor union of IBK strongly opposed the administration's promotional activities.

"The state-run IBK is a publicly listed company, with more than 30 percent of its shares owned by minor shareholders. Should the stock price or company value decline after relocating to a regional area, who would be held accountable?" the union said in a statement.