The Financial Services Commission (FSC), which oversees overall financial policy, will relocate to Sejong City in the second half of next year. While the Financial Supervisory Service (FSS), responsible for the supervision and inspection of financial companies, will initially remain in Seoul, the possibility of its future relocation to a regional area cannot be ruled out. Concerns are inevitable regarding disruptions in work cooperation between the FSC and the FSS, while attention is also focused on whether discussions regarding the regional relocation of policy banks, such as the Korea Development Bank (KDB), will flare up once again.

FSC, Which Let Out a Sigh of Relief, Ultimately Headed to Sejong... Employees 'Perplexed'

According to the financial sector on the 14th, the Ministry of the Interior and Safety (MOIS) announced the "2nd Central Administrative Agency Relocation Plan" the previous day, pushing forward with the priority relocation of 27 agencies, including the FSC and its affiliated institution, the Financial Intelligence Unit (FIU), starting next year. The number of relocation targets for the FSC and the FIU, currently located at the Government Complex Seoul in Jongno-gu, Seoul, stands at 420. These institutions are scheduled to move to Sejong in the second half of next year.

Inside the FSC, an atmosphere of perplexity has gripped staff over the unexpected relocation decision. Previously, Minister of Land, Infrastructure and Transport Kim Yoon-duk mentioned the President’s directive of "zero staying in Seoul," raising possibilities of relocation. However, after being excluded from the 1st relocation plan in September and President Lee Jae-myung revealing his vision of "Seoul as the economic capital and Sejong as the administrative capital," expectations for remaining in Seoul had grown. Yet, the move to Sejong was finalized in just a little over a month.

An atmosphere of resignation, going beyond mere perplexity, is even being detected. A section chief at the FSC stated, "We are quite shocked. Employees didn't expect this announcement, so there is currently a buzz accompanied by a sense of resignation." Another FSC official shared, "The possibility of relocation kept being discussed, but we thought a sliver of room remained. We didn't expect it to come out during the parliamentary audit period after it ended."

The housing and children's education issues for employees are also a heavy burden. A financial sector official noted, "There are quite a few employees at the FSC who transferred from other ministries—such as the Ministry of the Interior and Safety or the Ministry of Land, Infrastructure and Transport located in Sejong—just to work in Seoul. Now they are in a situation where they have to go back to Sejong. For those whose families find it difficult to move together due to dual-income situations and children's education, living expenses for 'maintaining two households' could increase." The government is discussing relocation support measures, but specific support packages, such as the scale of subsidies, have not yet been finalized.

The FSC has stepped up to minimize internal agitation. Immediately following the announcement of the regional relocation, FSC Chairman Lee Eok-won held an emergency meeting of executives and instructed Senior Vice Chairman Shin Jin-chang to form a task force (TF) to listen to the grievances and opinions of employees. The FSC plans to reflect the gathered opinions into future consultation processes with related ministries.

FSC to Sejong, FSS to Seoul... Concerns Over 'Cooperation' Due to Divergent Paths

Concerns are also being raised over the physical separation of financial policy and supervisory-inspection functions resulting from the FSC's relocation to Sejong. Pointing out that the FSS and a significant number of related organizations including major financial companies are located in Seoul, critics note that the burden of communication during emergency pending issues could increase. Even inside the FSC, questions are being raised over whether it is appropriate to perform tasks separated from the FSS.

The FSS is also paying keen attention to its future whereabouts. This is because the possibility of relocation could resurface ahead of the government's 2nd public institution regional relocation plan, scheduled to be announced in the fourth quarter of this year. An FSS official stated, "We thought that if the FSC stayed in Seoul, the FSS would likely not relocate either. Regional relocation discussions had been calming down for a while, but with the FSC's move to Sejong, the burden that we too might be relocated has grown."

The government maintains the stance that it is reviewing the FSS's regional relocation separately. A government official stated, "The FSS is in the form of a special corporation, and I understand that the overall matter regarding public institution relocation is being reviewed comprehensively."

Regarding the criticism that the FSC's relocation to Sejong runs counter to the "Seoul as the economic capital" vision, the official explained, "We judged that financial policy does not necessarily have to remain in Seoul to be strengthened. We will devise plans to maintain and strengthen financial market responsiveness when establishing the detailed relocation plan."

'Ongoing' Public Institution Relocation Plan Announced... Policy Banks Also 'Agitated'

Minister Yoon Ho-jung announcing the detailed plan for the relocation of central administrative agencies. (Photo: Yonhap News)

With the FSC's relocation to Sejong confirmed, attention is turning toward discussions on the regional relocation of policy banks such as the Korea Development Bank (KDB), the Industrial Bank of Korea (IBK), and the Export-Import Bank of Korea (Korea Eximbank). Financial public institution labor unions are keeping a close eye on the government's subsequent moves, guarding against the possibility of regional relocation. The possibility of joint responses is also being discussed if the relocation becomes a reality.

In particular, the Korea Development Bank, whose relocation to Busan was pursued during the Yoon Suk-yeol administration, is likely to get embroiled in relocation controversy once again. A KDB labor union official stated, "We will monitor the government's additional messages and the movements of labor unions at other financial public institutions." If future relocation discussions become concrete, possibilities of collective actions such as strikes are also being mentioned.

The issue of talent drain is another variable. Over 180 employees resigned from the Korea Development Bank over a two-year period from 2022 to 2023 when the regional relocation was being pursued. Concerns are being raised that if regional relocation discussions resume, the outflow of talent, centered around young employees, could repeat.

However, policy banks have their head office locations stipulated by law, meaning separate procedures such as legislation revisions are required for relocation.

Meanwhile, while the government plans to inject approximately 3.2 trillion won into the relocation of central administrative agencies, specific grounds proving the economic effects of the relocation have not been presented. A government official stated, "We have not yet found data clearly showing the economic effects according to the decentralization of central administrative agencies," while adding, "As the construction completion rate of the Administrative City is still around 60%, it is difficult to view that the project effects have fully manifested."

[ⓒ Global Economic Times. 무단전재-재배포 금지]