Shinhan Bank and Woori Bank are competing for the Seoul city treasury post, with this year's budget reaching 51 trillion won. Woori Bank had guarded the treasury for more than 100 years since 1915, but it lost the seat to Shinhan Bank in the last bid. Still, some worry that excessive competition over contributions between banks could lead to a "winner's curse."
According to the financial sector on the 22nd, Seoul plans to accept proposals from banks for the selection of the city treasury on May 4–6. It then plans to convene the Treasury Designation Review Committee around mid-May to select the city treasury.
Based on the review results, Seoul will designate the highest-scoring institutions for each treasury as the first and second treasuries. The first treasury handles the general accounts and special accounts, while the second treasury manages the funds. Currently, Shinhan Bank holds the operating rights for both the first and second treasuries.
Earlier, on the 9th, Seoul held a bidding briefing for the city treasury, and it was reported that the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—as well as SC Jeil and IBK Industrial Bank attended. This shows that banks are highly interested in the Seoul city treasurer post.
There are several reasons. The Seoul city treasurer can stably secure more than 5 trillion won in low-cost deposits (deposits for which banks can procure funds at an interest rate around 0.1%). Also, simply holding the operating rights for the Seoul city treasury serves as a marquee for institutional sales and self-promotion, which is a major advantage.
There are expectations that "it will be a two-way race between Shinhan Bank and Woori Bank." Woori Bank has handled the Seoul city treasury since the days of the Gyeongseong-bu Treasury (now the Seoul city treasury) in 1915 for more than 100 years. However, it lost the first treasury in 2019 and even the second treasury in 2023 to Shinhan Bank. To regain the honor of being the century-old city treasurer, Woori Bank formed a task force (TF) in the second half of last year.
Shinhan Bank, having managed the Seoul city treasury for eight years, has投入 more than 600 billion won in contributions, network construction, and other costs. In other words, it is not in a position to yield the treasurer seat easily. Accordingly, Shinhan Bank also formed a TF at the end of last year to craft its bidding strategy.
In the industry, there are concerns that a "winner's curse" could occur as banks wage excessive competition over contributions in this battle for the treasurer post. A banking sector official said, "The city treasurer post is not easy to view as good from a revenue perspective. It is not that there is no operating revenue at all, but it is generally smaller than the contributions the banks pay, so deficits can occur," and added, "However, there are advantages from low-cost deposits, and because the position carries such strong symbolism, banks are willing to bear massive contributions."