Seoul's autonomous districts have begun selecting their official treasury banks, with the chosen institutions set to manage roughly 1 trillion won ($713 million) in annual budgets — and several trillion won over a four-year term.
Six districts, including Gangnam-gu, Seocho-gu, Dongdaemun-gu and Geumcheon-gu, have launched their treasury bank selection processes, according to district officials Thursday.
Gangnam-gu, which has the largest fiscal budget among Seoul's 25 autonomous districts, runs an annual budget of 1.5 trillion won — meaning as much as 6 trillion won will flow through its treasury bank over four years.
Other districts, including Seocho-gu, also manage sizable budgets approaching 1 trillion won annually.
For banks, managing such large sums carries significance beyond deposit growth alone — holding a public institution's treasury account also bolsters a bank's symbolic standing and external credibility.
Gangnam-gu kicks off selection; Seocho-gu to follow
Among Seoul's districts, Gangnam-gu was the first to begin its treasury bank selection process.
The district is accepting proposals Thursday and Friday. Shinhan Bank, which has operated Gangnam-gu's treasury for the past four years, is widely expected to reapply, while attention is focused on whether rival banks will enter the competition.
A Gangnam-gu official overseeing the process said Thursday afternoon that it was difficult to disclose which banks had submitted proposals, calling the matter "highly sensitive."
The comment reflected concern that even revealing the list of applicants could affect competition among banks.
Following the proposal submission period, Gangnam-gu plans to hold a briefing on treasury management plans and conduct a rigorous review by an evaluation committee before selecting a financial institution to run its treasury for the next four years. A final decision is expected in September.
Seocho-gu will launch its own selection process shortly after, accepting proposals from Sept. 7 to 9.
Shinhan Bank currently holds the Seocho-gu treasury account as well. The bank is expected to mount an active defense of both contracts, while observers are watching to see whether other banks will mount a challenge.
'Limited profitability' — but incumbents expected to fight hard
Some observers, however, expect the competition to be less intense than in previous cycles.
Banks must offer districts relatively high interest rates, and the direct profitability of running a district treasury is understood to be modest.
"Even when a bank operates a district treasury, the actual profit it earns is not that significant," said a branch manager at a bank currently handling a district treasury account.
Banks also face pressure from districts — many of which have tight budgets — to sponsor local festivals and community events, adding to the financial burden.
Nevertheless, incumbent treasury banks are expected to defend their positions aggressively, as losing an account to a rival could damage their public image and weaken their business standing in the district.
Among Seoul's 25 autonomous districts, Shinhan Bank currently holds treasury accounts in six — Gangnam-gu, Seocho-gu, Seongdong-gu, Gangbuk-gu, Eunpyeong-gu and Guro-gu.
KB Kookmin Bank handles five districts — Gwangjin-gu, Dongdaemun-gu, Nowon-gu, Dobong-gu and Dongjak-gu — while Woori Bank operates the treasury accounts for the remaining 14 districts.
Meanwhile, the Seoul Metropolitan Government held a city treasury selection committee meeting in May and reselected Shinhan Bank — which had managed the city treasury for eight years — to operate the primary and secondary city treasury accounts from 2027 through 2030.
seouldream01@heraldcorp.com
