The Korea Federation of Small and Medium Enterprises has begun the process of selecting a custodian bank to manage asset under management totaling 38 trillion won. Fierce competition is expected between KB Kookmin Bank, the current custodian bank, and Shinhan and Woori Bank, which aim to win it back.
According to the financial sector on the 21st, KBIZ has launched the selection of a custodian bank to manage asset for the Yellow Umbrella Mutual Aid and mutual aid funds. KBIZ will accept proposals through the end of this month and select a preferred negotiation partner through evaluations in June. The average annual size of the entrusted asset under management is 38 trillion won.
The current custodian bank is KB Kookmin Bank. In 2023, KB Kookmin Bank took over the custodian role that Shinhan Bank had been handling. Shinhan Bank served as the custodian bank from 2017 to 2023, and Woori Bank handled it for three years starting in 2014.
They are expected to take part in this custodian bank selection as well. In particular, fierce competition is expected between Shinhan Bank, once the absolute powerhouse in institutional business, and KB Kookmin Bank, a rising powerhouse.
Institutional business allows banks to secure large amounts of low-cost funds during the contract period, generating revenue such as fees. Being selected as the KBIZ custodian bank also offers the advantage of increasing contact points with small and midsize businesses.
Previously, in the selection of the Seoul Metropolitan Government treasury, considered the biggest prize in institutional business, Shinhan and Woori Bank competed for Treasury 1, while Shinhan, KB Kookmin, and Hana Bank joined for Treasury 2, meaning all four major commercial banks participated.
A commercial bank official said, "Recently, the outcome of institutional business is decided not by the size of contributions but by factors such as organizational stability, execution capability, and internal control competence," adding, "Without a differentiated strategy, there is no need to change from a bank that already has the infrastructure."