Gangnam, Seocho and Dongdaemun see only incumbent banks bid; high contribution fees and rising contracted rates erode profitability. Seongdong-gu draws interest from Shinhan, Woori and KB Kookmin Bank, with Seongsu-dong, Wangsimni and Majang forming a compelling economic corridor.

Interior of Shinhan Bank's Seongdong-gu district office branch
Interior of Shinhan Bank's Seongdong-gu district office branch

Shinhan Bank emerged victorious in the competition for Seoul's city treasury in May, winning top scores for both the primary and secondary treasury accounts and securing the right to operate them from 2027 through 2030.

The win ended a century-long era of Woori Bank running the city treasury and gave Shinhan Bank a 12-year tenure in the role.

Attention in the financial sector has since shifted to the selection of treasury banks for Seoul's 25 autonomous districts.

The mood surrounding this year's district treasury bids, however, is markedly different from years past. Contrary to expectations of fierce competition, a string of districts have drawn only a single applicant — the incumbent treasury bank.

In the first round of applications completed so far, Gangnam-gu and Seocho-gu each received bids only from their current treasury bank, Shinhan Bank, while Dongdaemun-gu drew only its incumbent, KB Kookmin Bank.

If no other bank enters after a re-announcement, the districts in question are likely to conclude agreements with their existing treasury banks through a negotiated contract, in line with relevant regulations and procedures.

The outlook is that most of Seoul's district treasury positions will end up staying with incumbent banks this year.

The main reason banks have grown reluctant to bid is deteriorating profitability. The cooperative project fees and community contribution costs required to win a treasury contract have grown steadily, while the contracted interest rates applied to district deposits have also risen. The cost of building the IT systems needed to operate a treasury, along with staffing and branch expenses, adds further strain.

In the past, securing a district's stable deposit base and attracting civil servants, employees of affiliated agencies and local residents as new customers made the business worthwhile. More recently, however, a growing consensus holds that contribution fees, interest obligations and operating costs outweigh the tangible and intangible benefits of running a district treasury.

Some in the banking industry have gone so far as to say that winning a district treasury contract can result in a net loss once the actual profit and loss is tallied.

Amid this, Seongdong-gu stands out as a striking contrast to other districts.

Seongdong-gu is accepting applications for its next treasury bank through Friday, and Woori Bank and KB Kookmin Bank are reportedly considering bids alongside incumbent Shinhan Bank.

"In addition to the current treasury bank, Shinhan Bank, multiple banks have expressed interest," a Seongdong-gu official said.

Banks cite the district's strong accessibility as a key draw. The Seongdong-gu district office sits near Wangsimni Station, served by subway lines 2 and 5, the Suin-Bundang Line and the Gyeongui-Jungang Line, making it highly convenient for customers and business operations alike.

Seongsu-dong, which has grown into one of Seoul's most prominent emerging business and commercial districts, adds to the appeal. IT, fashion and cultural content companies, startups, pop-up stores, restaurants and cafes have been rapidly multiplying there, making it a district with strong potential for expanding into corporate banking, asset management and small-business finance.

The Majang Livestock Market is another factor. According to Seongdong-gu, the market handles 60 to 70 percent of livestock product distribution in the greater Seoul area and is home to more than 1,500 shops, making it the largest livestock specialty market in the country. The concentration of merchants and distributors generates substantial demand for deposits, loans and payment services.

Ultimately, Seongdong-gu's economic structure — linking Wangsimni's transport and lifestyle commerce, Seongsu-dong's emerging corporate and commercial base, and Majang-dong's traditional distribution industry — is what banks find attractive as a business foundation.

Holding the status of official district treasury bank also gives an institution a credibility advantage, making it easier to pursue linked sales of deposits, loans and card products to the district office, its affiliated agencies, local businesses, small merchants and residents.

While Seoul's district treasury business has broadly shifted from a golden goose to a venture with uncertain profitability, banks' preferences are diverging sharply depending on a district's commercial vitality, corporate base and potential for customer growth.

Whether the Seongdong-gu treasury race will actually become a three-way contest — and whether it will stand as an exceptional bright spot in an otherwise subdued Seoul district treasury market — remains to be seen.


seouldream01@heraldcorp.com