Possible Relocation of Financial Regulators Draws Union Warning Over Damage to Seoul’s Financial Ecosystem

South Korean financial unions are preparing for a tougher fight against any move to relocate major financial institutions from Seoul, warning that the policy could weaken oversight and disrupt the country’s financial ecosystem.

The government has said it will minimize the number of public institutions that remain in the capital during a second round of regional relocation. That has focused attention on the possible transfer of the Financial Supervisory Service, Korea Deposit Insurance Corporation, Korea Development Bank and Export-Import Bank of Korea.

Unions at the institutions say moving them away from Seoul would reduce efficiency and accelerate the departure of specialist staff. Seoul brings together financial companies, businesses seeking funding and government agencies. The unions argue that the financial industry also depends on the physical concentration of companies, regulators, government bodies and international institutions, which allows information exchange and cooperation.

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The effects of the policy have not been sufficiently demonstrated, as concentration in the capital was not resolved even after the first relocation of public institutions.

The status of the Financial Supervisory Service is a particular issue. It is a private institution established under the Act on the Establishment of the Financial Services Commission and is not designated as a public institution by the government. The government nevertheless considers it potentially eligible for relocation under the Special Act on Decentralization and Balanced Regional Development, which covers not only government-designated public institutions but also public entities established under law.

The unions at the Financial Supervisory Service, Korea Development Bank and Export-Import Bank said they would maintain their opposition and increase their response as government discussions proceed. The nationwide financial industry union has also announced a general strike for the 4th, listing opposition to the relocation of financial public institutions among its main demands. It argues that the first relocation program did not sufficiently reduce concentration in the capital and that financial institutions should not become test cases for a policy whose effects have not been demonstrated.

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Financial institutions, whose core competitiveness depends on expertise and talented personnel, must not be used as test cases for a policy whose effects have not been verified.