Civic groups and politicians warn the MOU could favor Hana Bank ahead of the selection process

The 'community contribution' evaluation criterion — worth 7 points — is at the center of the dispute

Hana Bank has been widely rumored as the frontrunner since the MOU was signed

Officials pose for a photo after signing an MOU on financial support and co-growth for Incheon's ABC+E industries at Incheon City Hall on Aug. 14. From left: Choi Young-su, executive vice president of Hana Securities; Park Ju-seon, executive vice president of Korea Technology Finance Corporation; Song Hyun-seok, Incheon city policy chief of staff; and Lee Ho-seong, president of Hana Bank. [Incheon City]
Officials pose for a photo after signing an MOU on financial support and co-growth for Incheon's ABC+E industries at Incheon City Hall on Aug. 14. From left: Choi Young-su, executive vice president of Hana Securities; Park Ju-seon, executive vice president of Korea Technology Finance Corporation; Song Hyun-seok, Incheon city policy chief of staff; and Lee Ho-seong, president of Hana Bank. [Incheon City]

A fairness controversy is intensifying over the selection of the next city treasury bank for Incheon, which manages 68 trillion won ($50.6 billion) in municipal funds.

The dispute erupted after Incheon City signed a 350 billion won investment and financial support MOU with Hana Financial Group just as Shinhan Bank and Hana Bank were preparing to compete for the city's primary treasury account.

The city maintains the MOU is entirely separate from the treasury bidding process, but local civic groups and the Incheon City Council have raised concerns that the large-scale investment and financial support commitments in the agreement could directly or indirectly influence the "community contribution" criterion used in the treasury evaluation.

The central question is whether signing a major agreement with one of the competing financial institutions — while selecting a bank to manage 68 trillion won over four years, or 17 trillion won annually, through 2030 — can truly guarantee equal footing for all applicants.

Since the MOU was signed, rumors have spread in the local community that Hana Bank has already emerged as the clear frontrunner.

"Is this tilting the playing field?" — equity concerns raised

The Incheon Peace and Welfare Solidarity issued a statement Sunday calling for an immediate response.

"Incheon City's decision to sign a separate financial support agreement with Hana Financial Group on the eve of the treasury bid could undermine the fairness and impartiality of the evaluation," the group said, urging a transparent and equitable selection process.

Earlier, Song Hyun-seok, Incheon's policy chief of staff, had told reporters on Aug. 12 that the city planned to sign a co-growth MOU with Hana Bank.

On Aug. 14, Incheon City signed the MOU with Hana Bank, Hana Securities and Korea Technology Finance Corporation, aimed at revitalizing the local economy and fostering future growth engines.

The agreement's key commitments include establishing a 200 billion won Incheon Unicorn Fund, providing 150 billion won in financial support for the "ABC-E development" initiative, carrying out citizen-focused ESG social contribution activities, and extending inclusive finance support for co-growth.

"The city must clarify whether the MOU feeds into the evaluation"

The crux of the matter is how the MOU's contents relate to the treasury selection criteria.

According to the Incheon Peace and Welfare Solidarity, the treasury evaluation weighs creditworthiness, interest rates and operational management capacity as primary factors, but also includes "community contribution" as a scored category.

That criterion carries 7 points — relatively modest — yet the contributions banks make to the local community during treasury operations, including grants, cooperative project funding and regional investment, are widely seen as decisive competitive factors.

Analysts note that because Incheon already receives some of the highest deposit interest rates in the country, it may be difficult for banks to differentiate themselves significantly on interest rates alone.

Ultimately, banks' proposals on community contribution and local economic revitalization could prove to be the decisive variable in the selection.

That is why the question of how the 350 billion won MOU with Hana Financial Group will be treated during the evaluation has become the central point of contention.

Critics say the city must clearly explain whether the investment and financial support commitments in the agreement could be counted toward Hana Bank's community contribution or regional economic support record — and, if they are to be excluded from the evaluation, on what grounds.

Civic groups demand fair review that puts citizens first

The Incheon branch of Citizens' Coalition for Economic Justice said it would be difficult to avoid accusations of unfairness and inequity, given that the city announced a 350 billion won investment agreement with Hana Financial Group — widely regarded as a leading contender — just before the treasury bid opened.

People Power Party members of the Incheon City Council held a press conference on Aug. 24, saying the MOU signed with a specific financial institution on the eve of the treasury selection could raise serious questions of fairness and equity.

They particularly called on the city to disclose the legal and administrative authority and role of Policy Chief of Staff Song, who led the co-growth MOU with Hana Financial Group.

They also said that if procedural irregularities are found between the treasury selection process and the MOU, those responsible should be held accountable.

The core of the controversy, observers say, will ultimately center not only on the legality of the MOU itself, but on whether signing a large-scale agreement with a competing financial institution ahead of such a consequential administrative process could compromise genuine equality among all applicants.

All eyes on Shinhan, Hana Bank presentations Sept. 17

Incheon City has scheduled presentations by Shinhan Bank and Hana Bank — the two applicants for the primary treasury account — for Sept. 17. NH NongHyup Bank has applied for the secondary treasury account.

The Incheon Peace and Welfare Solidarity called for the treasury selection committee to be constituted fairly, and said the qualitative evaluation criteria should reflect banks' ethics and legal compliance, a sustainable four-year regional reinvestment plan, and their track record of community contribution.

The group also said that given Incheon's lack of a local bank, the evaluation should include concrete plans for financial support and livelihood assistance for small merchants, micro-manufacturers and small and medium-sized enterprises.

Ultimately, the group said, what matters most in selecting a bank to manage 68 trillion won in city finances over four years — 17 trillion won a year — is not the interests of any particular bank, but what financial and economic benefits will flow to Incheon's citizens.

Addressing the allegations raised by civic groups and politicians, and securing public confidence that all competing banks are being evaluated on equal terms, will be the most pressing challenge Incheon City faces as the treasury selection process moves forward.

Meanwhile, Hana Bank and Hana Financial Group have been moving quickly ahead of the September treasury selection — relocating their headquarters to Incheon's Cheongna International City and ramping up local support projects and promotional activities since the June 3 local elections.


gilbert@heraldcorp.com