One of the most sensitive topics in the financial sector today is 'regional relocation.' As the government accelerates the second phase of public institution relocations, the possibility of moving national banks such as the Industrial Bank of Korea, the Korea Development Bank, and the Export-Import Bank, as well as the Financial Supervisory Service and the Korea Deposit Insurance Corporation, is being discussed. The financial labor union has announced a general strike on the 4th, making the prevention of regional relocation a key demand. Although the target institutions and relocation areas have not yet been determined, the financial sector is already in turmoil.
Few would oppose the intention behind regional balanced development. In a situation where people, businesses, and capital continue to concentrate in the metropolitan area, relocating public institutions could serve as a means to create new jobs and industries in the regions. It is also true that innovation cities were established following the first phase of public institution relocations. However, it is contradictory to worry only about regional extinction while allowing the concentration in the metropolitan area to continue.
That said, relocating financial institutions is not just a matter of deciding 'where to send them.' Finance is an industry where people, information, and networks are key competitive factors. Financial companies, government agencies, and market participants need to exchange information frequently, and quick decision-making is essential in crisis situations. If the main office address is simply moved to a regional location while key personnel leave and major meetings and decisions continue to take place in Seoul, the significant costs of relocation will lose their meaning.
We must also be cautious about viewing the relocation targets as a single group. Policy financial institutions and financial supervisory agencies have different roles. The Industrial Bank of Korea and the Korea Development Bank focus on corporate finance and policy funding, while the Financial Supervisory Service and the Korea Deposit Insurance Corporation are primarily responsible for financial market supervision and crisis response. Even with the same goal of regional balanced development, it is necessary to design the relocation methods and functional placements differently, taking into account the characteristics of their work, the degree of connection with private financial institutions, and the need for crisis response. Rather than asking 'how many institutions will remain in Seoul,' we should first consider which functions are most efficient to place where.
The past performance of public institution relocations shows what this policy should focus on. In the first phase, 153 public institutions moved to ten innovation cities across the country. While there was an effect of supplying new populations and jobs to the regions, it revealed limitations in creating the self-sustaining industrial ecosystems that were expected.
According to an analysis by the Korea Institute for Industrial Economics and Trade, the influx of population from the metropolitan area to innovation cities increased during the period when public institution relocations were concentrated, but it sharply declined after 2017, and by 2023, it had turned into a net outflow. Even the influx of population to innovation cities within the same region has stopped since 2025. The employment effects were primarily seen in the service sector, and the extent of diffusion to surrounding areas was also limited. This indicates that moving an institution and enhancing regional competitiveness are separate issues.
If the focus is on evenly distributing institutions across regions based on political considerations, there is a high likelihood of repeating the limitations of the first phase. In particular, financial institutions must first consider what kind of synergy they can create with regional industries and whether they can attract related financial companies and professionals.
This is precisely the point the government must consider in the second phase of public institution relocations. The criteria for success should not be how many institutions were removed from Seoul or how many were placed in which regions. It is essential to create incentives for private companies associated with the relocated institutions to move as well and to establish living conditions that allow employees and their families to settle in the regions. Only then can the relocation serve as a catalyst for growing regional industries rather than merely a change of address.
The relocation of financial institutions is a means, not an end. If the address is changed without achieving the goal of regional balanced development, both the government and the financial sector opposing the relocations will incur significant costs. The question the government must answer before finalizing the list of relocations is not 'where to send them,' but 'what to leave behind there.'
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.