Competition is heating up over the selection of the next custodian bank for Incheon Metropolitan City, which manages roughly 17 trillion won ($12 billion) in municipal funds annually.
The contest has drawn particular scrutiny after Hana Financial Group signed a 350 billion won co-prosperity agreement with Incheon while the city treasury selection process is already underway, raising concerns about fairness and the timing of the regional partnership initiative.
Incheon City announced its plan to designate a new city treasury bank on Thursday, with the selected institution set to operate from 2027 through 2030.
The No. 1 treasury manages the city's general account, public enterprise special accounts and various funds — a portfolio worth roughly 15 trillion won a year. The No. 2 treasury handles other special accounts totaling about 2 trillion won. Shinhan Bank has held the No. 1 treasury post since 2007, while NH NongHyup Bank currently operates the No. 2 treasury.
The city will accept applications and proposals from Aug. 28 through Sept. 2, with a preferred designee to be selected in September.
The contest is shaping up as a head-to-head race between Shinhan Bank, which has effectively run the No. 1 treasury for 20 years, and Hana Bank, which is set to relocate its group headquarters to Cheongna International City in September.
The co-prosperity agreement and its conflict-of-interest risk
Against this backdrop, Hana Financial Group recently signed a 350 billion won co-prosperity MOA with Incheon City.
The agreement includes the creation of a 200 billion won Incheon Unicorn Fund to nurture the city's future growth industries, as well as 150 billion won in ABC+E financial support jointly provided by Incheon City, the Korea Technology Finance Corp. and Hana Bank.
The pact also covers financial support for youth, vulnerable groups and small business owners, housing stability for jeonse fraud victims, youth housing and employment assistance, and the expansion of cultural and sports infrastructure.
Incheon City stressed that the agreement is not a simple MOU but a binding MOA carrying actual performance obligations for both parties. However, the city said it will not factor the agreement into the evaluation of city treasury proposals.
The concern lies less with the substance of the agreement than with its timing. The city had already announced its treasury selection plan and proposal submissions were set to begin Aug. 28 when Incheon and Hana Financial — a leading contender for the treasury — signed a major pact worth hundreds of billions of won.
Hana Financial's Incheon push since July
Viewed in isolation, the agreement could be read as a straightforward regional economic stimulus initiative. Taken together with earlier moves, however, Hana Financial's co-prosperity activities in Incheon have been notably broad in scope.
Hana Bank has rolled out large-scale financial support for small and medium-sized enterprises and small business owners in Incheon this year. In July, it made a special contribution of 5.5 billion won to the Incheon Credit Guarantee Foundation to supply 84 billion won in small-business-focused guarantee loans.
The bank also launched 10 billion won in emergency operating funds and 300 billion won in specialized industry loans targeting Incheon-based companies.
Hana Bank President Lee Ho-seong personally visited Sinpo International Market and the Namdong National Industrial Complex to meet with merchants and business owners.
In August, the bank launched its "Hana Happy Dream Bus" service in earnest, targeting elderly and vulnerable senior residents in Incheon.
The program sends financial experts directly to senior centers and welfare facilities to provide retirement asset management advice, guidance on inheritance and gifts, and financial fraud prevention education. It began in Seo-gu and Bupyeong-gu and is set to expand to Gyeyang-gu, Yeonsu-gu and the island areas of Ongjin-gun.
On Wednesday, the bank donated 50 boxes of "Happy Sharing Boxes" to Gyeyang-gu for residents vulnerable to extreme heat. Hana Financial has been visibly accelerating a wide range of other regional co-prosperity initiatives as well.
None of this can be attributed solely to the city treasury bid. But observers note that the concentration of large-scale financial support and on-the-ground activity in Incheon since July — when the selection process formally began — combined with the 350 billion won agreement signed just before the submission deadline, could fuel perceptions of unfairness and trigger a significant public controversy over the process.
Shinhan Bank must be held to the same standard
That standard, however, should not apply to Hana Financial alone. Shinhan Bank has operated Incheon's No. 1 city treasury for 20 years since 2007. Its accumulated treasury management experience, IT systems and track record of community contributions must be evaluated against the same criteria applied to Hana Bank.
Shinhan Bank has also maintained financial support for small and medium-sized enterprises and small business owners in Incheon, along with ongoing social contribution activities.
Voices are therefore emerging that this treasury competition should not be reduced to a simple contest over who has offered the most money most recently.
Shinhan Bank should present an objective account of its 20-year community contribution record and its plans for the next four years, while Hana Bank should make the case for the future regional economic impact of its Cheongna headquarters relocation and its recently expanded co-prosperity programs — each to be assessed on its own merits.
Continuity matters more than timing
What matters most in this competition is not what each bank did before the selection, but whether it can keep its promises after being chosen.
The selected treasury bank will operate for four years, from 2027 through 2030.
When assessing community contributions, evaluators should look beyond one-time donations or headline financial support figures announced just before the bid, and instead verify: a sustained track record of regional co-prosperity over the past three to five years; a clear distinction between actual cash contributions and simple loan supply volumes; the real economic impact on the local economy; co-prosperity plans for the coming four years; and whether commitments made before selection are actually honored afterward.
In particular, whether the 350 billion won agreement between Hana Financial and Incheon City is honored in full — regardless of whether Hana Bank wins the treasury designation — is expected to become the central question in any future controversy.
If Hana Bank honors the agreement at the same scale and on the same terms even without winning the treasury designation, the co-prosperity character of the pact will be considerably clearer.
If, on the other hand, the scope or terms of support change depending on the selection outcome, the fairness controversy surrounding the agreement will only deepen.
Incheon City cannot escape its own burden of proof
Incheon City has drawn a clear line, saying the agreement will not be reflected in the treasury evaluation.
From the public's perspective, however, a simple assurance that the pact will not affect the evaluation may not be enough.
Incheon City needs to disclose transparently when it began discussing the agreement with Hana Financial, whether it offered other financial institutions the same opportunity to cooperate, whether the agreement's contents are included in the treasury proposal, how evaluators were instructed to handle the agreement, and whether Hana Financial will honor the pact regardless of the selection outcome.
This is not about excluding Hana Bank — it is the minimum verification needed to secure public trust in the entire treasury selection process.
'Who stays longer' matters more than 'who gives more'
Ultimately, regional co-prosperity is an unavoidable variable in the competition for Incheon's 17 trillion won city treasury. But the argument that co-prosperity should not be reduced to a bidding war over dollar amounts is gaining traction.
More important than presenting a large-scale support package just before the bid is whether the winning bank continues to honor its commitments to Incheon residents throughout the full four-year term.
Shinhan Bank must draw on its 20 years of operating experience to present a credible account of its past community contributions and its plans for the next four years. Hana Bank must demonstrate that its Cheongna headquarters relocation and its recently expanded co-prosperity programs will continue regardless of whether it wins the treasury designation.
Ultimately, the true winner of this treasury competition should not be the bank that promised the most just before selection, but the one that keeps its commitments to the community throughout its tenure.
Given that the city is entrusting the public purse — 17 trillion won of citizens' money — Incheon City itself has an obligation to make public not just its agreement with a specific financial institution, but the full transparency of the selection process, the durability of the commitments made, and whether those commitments are followed through after the decision is made.
gilbert@heraldcorp.com
