Goldman Sachs causes debate over financial services cluster

Yeouido financial district in Seoul / gettyimagesbank

By Park Jae-hyuk

Goldman Sachs has unintentionally sparked a debate in Korea, after foreign news outlets reported the U.S. investment bank is considering moving its asset management arm to Florida from Wall Street, the center of the global financial industry.

The bank's possible action has been mentioned here as a case that supports those who claim domestic financial firms clustered in Seoul should be dispersed to provincial cities, such as Busan and Jeonju, North Jeolla Province.

Korea Institute of Finance senior research fellow Lee Yoon-sok is one of those who cite Goldman Sachs to raise questions about the clustering of financial services.

“At the time of the unprecedented crisis due to the COVID-19 pandemic, clusters cannot guarantee the development of the financial industry anymore,” he said in a recent forum on ways to make Yeouido an international financial hub.

Korea Development Bank's overseas business department head Yang Seung-won opposed the claim in the forum. He supported the necessity of clustering for the financial industry, saying the government should rethink moving state-run banks in Seoul to provincial cities.

In the U.S., financial firms have continued to depart from New York. Elliott Management is reportedly planning to move its headquarters to West Palm Beach from midtown Manhattan next year. AllianceBernstein moved its headquarters to Nashville, Tennessee, from New York. Blackstone Group and Citadel are also expanding their presence in Florida.

However, Korean financial firms in Seoul are more likely to stay because the ruling Democratic Party of Korea seeks to foster Yeouido as an international financial hub like Hong Kong and transform the entire Seoul area into an international economic financial capital. The ruling party made this proposal earlier this month, when it announced its plan to move the National Assembly to Sejong.

Most banking industry insiders were satisfied with the measure, saying the ruling party's announcement showed the Moon Jae-in administration's decision to continue to place state-run financial institutions in Seoul.

“Our foreign counterparts want to handle their business in one place when they visit Korea for important meetings,” a top executive of a state-run financial institution in Seoul said on condition of anonymity. “If they have to visit Seoul, Busan and Jeonju to meet Korean CEOs, this will be definitely bad for the country's competitiveness.”