'August → September → Now Q4': Endless Relocation Fears... Financial Authorities Held Hostage by Political Calculations

FSC Relocation Decision Delayed Again

"Minimizing Retention in the Capital Area"

"Finance Is a Cluster Industry... Leaving Seoul Would Weaken Policy and Supervisory Capabilities"

Busan Politicians Already Vying to Attract Institutions

Uncertainty surrounding the relocation of financial authorities is being prolonged, as the government has yet to confirm whether the Financial Services Commission—long considered a likely candidate for relocation to Sejong—will make the move. The government announced that it would finalize the list of institutions subject to relocation within the fourth quarter. However, the future of not only the Financial Services Commission, but also the Financial Supervisory Service and state-run banks, remains unclear. Both inside and outside financial authorities, concerns are mounting that the debate over relocation will resurface repeatedly until the 2028 general election, as political calculations seeking balanced regional development and the local vote may continue to weigh on the decision, even if a decision is made for the institutions to remain in Seoul.

On August 24, in front of the Love House at the Blue House in Seoul, union members spoke at a joint press conference held by the Deposit Insurance Corporation and the Financial Supervisory Service labor unions to resolutely oppose the relocation of public institutions. At the press conference, they urged that "the Deposit Insurance Corporation and the Financial Supervisory Service be excluded from the second public institution relocation plan and that the plan be reconsidered from the beginning based on the effectiveness of financial system protection and crisis response." Photo by Yonhap News

According to the financial authorities on September 4, the Financial Services Commission was not included in the administrative and public institution relocation plan announced by the government the previous day. While the Ministry of Justice and Ministry of Gender Equality and Family have been confirmed for relocation to Sejong, decisions on whether to move financial public agencies such as the Financial Services Commission, the Financial Supervisory Service, the Deposit Insurance Corporation, and state-run banks have again been postponed.

Minister of the Interior and Safety Yun Ho-jung stated regarding the relocation, “The fact that certain institutions were not mentioned today does not mean they are excluded from the list of possible relocations,” adding, “We will finalize the target institutions within the fourth quarter.” The decision, which was initially to be submitted to the Cabinet at the end of August but was canceled, was not concluded in the September announcement, either, and has again been postponed to the fourth quarter.

Within the financial authorities, the latest announcement is not being taken as a clear sign that they will remain in Seoul. The government has reiterated its principle to “minimize retention in the Seoul metropolitan area,” and Minister Yun also left open the possibility that the Financial Services Commission could be included as a relocation candidate in future discussions.

An official from the Financial Services Commission commented, “Since the government has stated that exclusion from the announcement does not mean we are off the list, it seems likely that we will have to move to Sejong. While we would prefer to remain in Seoul, if the decision is relocation, we hope the conclusion can be reached quickly so that we have time to prepare.”

Some analysts say it is difficult to read too much significance into the exclusion of the Financial Services Commission from this announcement. While the Ministry of Justice and Ministry of Gender Equality and Family are categorically excluded from relocation under the Multifunctional Administrative City Act and would require a legal amendment to move, the Financial Services Commission could be relocated without such a legal change, which may be why it was not specifically addressed in the latest announcement.

The Financial Supervisory Service, also considered as a potential candidate for relocation to Sejong, is remaining alert. An official from the Financial Supervisory Service stated, “When the government softened its stance from ‘zero retention in Seoul’ to merely announcing that a decision would come in October or November, we felt somewhat relieved. But yesterday, by again stressing the principle of ‘regional relocation and minimizing retention in the metropolitan area within the fourth quarter,’ it has caused unrest among employees.”

Resistance is growing within the financial sector amid concerns that, as discussions drag on, political considerations for regional balance may be taking precedence over the unique needs of the highly concentrated financial industry.

Finance is a representative “cluster industry” in which competitiveness increases the closer financial authorities, financial companies, and specialists are located together for rapid information sharing and communication. With most financial companies and related infrastructure concentrated in Seoul and the metropolitan area, the prevailing view within the financial sector is that relocating the authorities to a provincial region would inevitably undermine policy and supervisory capabilities, decrease work efficiency, and lead to an exodus of skilled professionals. The Financial Supervisory Service labor union recently argued in a statement that “91.6% of financial company headquarters and 72.7% of listed company headquarters are concentrated in the capital area,” and that massive additional costs would arise from increased business trips for inspections and supervision if relocated.

Diminished crisis response capability is also cited as a major concern. During the widespread savings bank bank run crisis in 2011, financial authorities convened a meeting just past midnight to respond to the situation. Likewise, at the end of 2024, when a virtual martial law situation threatened financial market stability, financial authorities and related agencies held emergency meetings early in the morning. If the physical distance between financial authorities and the market increases, there are concerns that it will limit timely cooperation and response in emergencies.

Financial institutions advocating for remaining in Seoul are stepping up their efforts. Labor unions at organizations such as the Financial Supervisory Service and Deposit Insurance Corporation, both mentioned as relocation candidates, plan to continue collective action through press conferences and submitting petitions. On this day, the Financial Supervisory Service labor union will submit a petition opposing relocation, signed by 1,679 employees, to the government at 2 p.m.

Meanwhile, as the government’s decision is delayed, competition to attract financial institutions is already heating up in the political arena. On September 2, People Power Party lawmakers from Busan publicly urged the relocation of the Financial Services Commission, Financial Supervisory Service, and Korea Development Bank headquarters to Busan. Their argument is that integrating policy, supervision, and policy finance functions in one place will foster Busan as a financial hub.

“Even if the conclusion by the end of the year is to remain in Seoul, there is growing anxiety that the debate over relocation may reignite at any time under the pretext of balanced regional development and revitalizing the local economy,” said an official from the financial authorities. “There are significant concerns that this could remain a political issue through the 2028 general election.”

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