KB Kookmin Bank to launch online gold bar sales, a first among Korean banks

KB Kookmin Bank to begin online gold bar sales Sept. 10

Banks diversifying denominations, cutting sales fees

Longer lifespans drive inheritance planning demand; customers favor verified channels

Banks are expanding gold bar sales channels from branches to online platforms. A staff member arranges gold bars at the Korea Gold Exchange in Jongno-gu, Seoul. [Yonhap]

As demand for gold investment continues to grow, banks are expanding gold bar sales beyond their branch networks to online channels. The move is part of broader efforts to lower the barrier to investment — by offering smaller denominations and cutting sales fees.

KB Kookmin Bank will begin selling gold bars through its KB Star Banking app starting Sept. 10, having already revised its terms and conditions for the service, according to the financial industry Thursday. The bank is the first in the country to make gold bars available through internet banking and a mobile app. Shinhan Bank, Hana Bank, Woori Bank and NH NongHyup Bank still sell gold bars only at branches.

A gold bar sales page is already live on the KB Star Banking app, where customers can browse product information. Actual orders, however, will not be accepted until Sept. 10. Even for online purchases, customers must pick up the physical gold at a branch.

Banks are also broadening the range of available denominations. KB Kookmin Bank plans to add a 37.5-gram product. Shinhan Bank has been offering 500-gram, 375-gram and 112.5-gram products since May. Woori Bank carries products as small as one don (3.75 grams), catering to customers looking to invest in small amounts.

Fee cuts have followed. Banks have been revising their terms and conditions in stages since the beginning of this year, applying a sales commission rate of 4.9 percent on 1-kilogram and 100-gram products and 6 percent on 10-gram products — down 0.1 percentage point and 1 percentage point, respectively, from previous levels.

Trading has also been picking up. Gold bar sales at the five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — totaled about 15.6 billion won ($11.3 million) through Monday. That works out to a daily average of 1.73 billion won on trading days, roughly 20 percent more than the July daily average of 1.45 billion won.

One driver of demand is inheritance planning. As life expectancy rises, customers are accumulating gold bars to prepare for wealth transfers ahead of time. A private banker at one of the major banks said customers who buy gold bars are often doing so to get ahead of the pre-gift aggregation period — 10 years for heirs and five years for non-heirs — before an inheritance is counted. "Many customers buy gold bars early to prepare for inheritance before the aggregation window kicks in," the banker said, noting that gold investment options include gold banking accounts, gold ETFs and Korea Exchange spot gold, but that gold bar buyers tend to have estate planning in mind.

Trust in the distribution channel has also played a role. As the number of places to buy gold has grown, so have concerns about adulterated or counterfeit gold, pushing customers toward verified channels such as banks. "Customers appear to find reassurance in the fact that they are buying Korea Gold Exchange gold through a regulated financial institution like a bank," the private banker said.

Meanwhile, banks are scaling up their gold-related products to meet rising demand. Hana Bank raised the per-offering sales cap for its Hana Gold Trust from 4 billion won last year to 5 billion won in January. In June, it expanded eligible gold products beyond 24-karat pure gold to include 18-karat and 14-karat gold, and raised the annual return for one-year customers from 1.5 percent to 1.7 percent. The bank also added nine branch locations handling the product in June, bringing the total from 168 to 177.

won@heraldcorp.com