Combined Size Surpasses Seoul… Fierce Competition Among Banks for Local Government Depositories in North Gyeongsang, Incheon, and Jeonnam-Gwangju

North Gyeongsang Province Application Closed on the 13th, Incheon Holds Briefing Session

Showdown for Incheon's Primary Depository: "Shinhan Bank vs. Hana Bank"

Jeonnam-Gwangju Metropolitan City Depository Ranks Third Largest Nationwide

Banks are fiercely competing for the designation of local government treasuries, with many current contracts set to expire by the end of this year. The combined scale of the treasuries in North Gyeongsang Province (KRW 15 trillion), Incheon Metropolitan City (KRW 17 trillion), and South Jeolla & Gwangju (KRW 25 trillion) surpasses even that of Seoul (KRW 52 trillion), making this an opportunity that banks cannot afford to miss.

According to the financial sector on August 14, North Gyeongsang Province closed submissions for treasury designation applications the previous day, and Incheon held a briefing session on treasury designation. South Jeolla & Gwangju is expected to begin its solicitation for treasury designation next month.

The "2026 Incheon Treasury Designation Briefing" held the previous day at the Incheon Free Economic Zone Authority in Yeonsu-gu saw the participation of officials from all five major commercial banks: KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, and NH Nonghyup Bank. Initially, Incheon limited the number of attendees per bank to under ten, and including city officials and related staff, a total of about 50 people attended. At the scene, only routine questions—such as "How many OCR bills are processed?"—were reportedly raised.

Currently, Shinhan Bank manages Incheon's No. 1 Treasury, while NH Nonghyup Bank is responsible for No. 2 Treasury. Hana Bank, KB Kookmin Bank, and Woori Bank are expected to challenge them. Especially, a fierce battle between Shinhan Bank and Hana Bank is anticipated for the primary treasury spot. Shinhan Bank has emphasized its proven operational capabilities, having managed the primary treasury for over 20 years since 2007. Hana Bank is likely to highlight the relocation of Hana Financial Group’s headquarters to Incheon's Cheongna International City starting next month.

In North Gyeongsang Province, which manages an annual budget of KRW 15 trillion, NH Nonghyup Bank currently oversees the No. 1 Treasury (KRW 13.5 trillion), while iM Bank manages the No. 2 Treasury (KRW 1.5 trillion). In addition to incumbent operators NH Nonghyup Bank and iM Bank, several commercial banks have submitted bids. The selected bank will be in charge of collecting revenue, disbursing expenditure, and other treasury work for North Gyeongsang Province from January 1, 2027 to December 31, 2030.

The competition for treasury designation in South Jeolla & Gwangju, which will start the selection process next month and finalize it in October, is also expected to be intense. The combined annual budget for the South Jeolla & Gwangju treasury (KRW 12 trillion), Gwangju (KRW 8 trillion), and government integrated support funds (KRW 5 trillion) totals about KRW 25 trillion, making it the largest among metropolitan governments seeking new treasury designations in the second half of this year. Since last month, NH Nonghyup Bank (primary treasury) and Gwangju Bank (secondary treasury) have been temporarily operating the treasury, and although a two-way race between these banks appears likely, the banking sector sees potential surprises with other commercial banks also considering submitting bids.

The criteria for designating local government treasuries follow guidelines set by the Ministry of the Interior and Safety. The scoring includes: a financial institution's overall creditworthiness and financial stability (25 points); interest rates on loans and deposits to the local government (17 points); convenience for local residents (18 points); treasury operation management capabilities (22 points); contributions to the local community and collaborative projects with the government (7 points); and other items stipulated by local government ordinances or rules, considering regional uniqueness (11 points). The 11 points assigned to other items may be redistributed to other categories if necessary.

Accordingly, Incheon set its own evaluation standards as follows: overall financial institution creditworthiness and financial stability (25 points); loan and deposit rates to the city (18 points); citizen convenience (24 points); treasury operation management capabilities (24 points); local community contribution and collaboration with the city (7 points); and other items (2 points). For the "other" category, special focus will be on 'contributions to carbon neutrality.' Banks will be evaluated and compared based on whether they have declared carbon neutrality, plans and records of recovering investments in coal power, participation in international climate finance initiatives, and performance in new and renewable energy investments.

South Jeolla & Gwangju also revised its "Ordinance on Treasury Designation and Operation" and "Scoring Criteria for Evaluation Items," assigning 56 points for quantitative evaluation items such as overall credit and financial stability, and 44 points for qualitative items including resident convenience, treasury operation management, and local contribution or collaborative projects. As a result, commercial banks are increasingly optimistic about their chances.

Notably, the score allocation for interest rates applied to demand deposit accounts was raised from 3 points to 8 points, giving commercial banks an advantage in interest rate competition. A commercial bank representative commented, "The South Jeolla & Gwangju treasury is the third largest among metropolitan government treasuries after Seoul and Gyeonggi Province. Previously, the focus on regional operations made competition difficult, but with the increased emphasis on interest rates, we now have greater incentive to bid."

This content was produced with the assistance of AI translation services.