You have to reduce your individual size to live… Banks selling real real estate

Kookmin Bank started to sell idle real estate such as stores worth 18 billion won (based on the lowest bid price). Other banks are also jumping into the sale procession by selling closed stores and various real estates as a short sale. It is an analysis that banks are “reducing their size” in earnest as finance has rapidly become non-face-to-face after the Corona 19 incident last year.

A row of closed stores appears

According to the banknote on the 24th, Kookmin Bank announced the simultaneous sale of the real estate in its seven branches and branch offices through Onvid, a real estate auction site. Targets for sale include land and real estate where stores in Sindang-dong and Munjeong-dong, Chungnam Gongju and Nonsan, Yeongcheon, Gyeongbuk, Sangbang-dong, Gimhae, Gyeongnam, and Singi-dong, Yeosu, Jeollanam-do. Including the building in Nonsan (5th floor, 4.7 billion won), the total minimum bid is 17.9 billion won.

It is the largest among real estate sales that a domestic bank is promoting this year. An official from Kookmin Bank explained, “It is to sell real estate that has been closed so far and to turn it into cash.”

The industry talks that not only Kookmin Bank but also a large number of banks are selling real real estate in a row. This is because the number of branches closed due to fewer customers since the Corona 19 incident, and banks are also changing their store system centering on local base stores. Last year, the amount of idle real estate disposed of through a short sale by six major banks (Kookmin Shinhan Hana Woori Nonghyup Corporation) was 127 billion won. It increased by 2.6 times compared to 2019 (49 billion won). This year, a real estate (Hana Bank) worth 22.9 billion won has already completed the sale. The scale of real estate that these banks disposed of through voluntary contracts (one-to-one contracts) also jumped more than five times during the year from 30.2 billion won to 16.4 billion won in 2019.

Banknotes explained that the procession of real estate sales increased rapidly as the Corona 19 incident prolonged.

This is because the customer’s footsteps have decreased significantly at each store, and the proportion of non-face-to-face banking has rapidly increased. Big tech (large IT companies) such as Naver and Kakao made full-fledged advance into finance, which also fueled the bank’s restructuring.

In particular, from August to September last year, bank-owned real estate worth 170 billion won a month came out as a short sale. At that time, Hana Bank launched 27 and Kookmin Bank launched 10 at once. Targets for sale included closed stores, idle shopping malls, and buildings. An official from a bank said, “In case of crisis, it is more difficult to sell real estate that has invested a large amount of money rather than leaving it unused as it becomes difficult to use common facilities such as dormitories, training centers, and sports facilities. I think there are many places that I judged better.”

As if sales increase from this year

From this year, it is expected that the scale of real estate sales by banks could increase. As the number of offline customers decreases, each bank is reorganizing its stores into a regional base system. It is a way to increase efficiency by establishing representative branches in the region and consolidating stores with low demand. Kookmin Bank and Shinhan Bank have been following this system for several years, and Woori Bank also decided to operate stores this year in a value group (VG). Hana Bank has been undergoing extensive store reorganization and restructuring since 2017.

An official from a large bank said, “These days, even major stores such as Seoul and Myeong-dong, where people were crowded, have become so busy that they have no longer waited for a number. Store demand continues to decline.” Another bank official said, “In many cases, banks sell real estate as short sale, but if it is sold several times, it may be sold as a number of contracts.” Can be bigger.”

It is analyzed that the threat of big tech is also encouraging banks to improve their constitution. Large banks are bound to lag behind in cost competition compared to big-tech financial companies because store operation and employee labor costs are fixed. The operating income expense ratio (CIR), which is the proportion of sales and management expenses (labor expenses plus rents, etc.) in operating profit, recorded 44-54% of last year. In the future, Kakao Bank, which has no stores, is expected to drop to the 30% level after listing.

An executive of a commercial bank said, “The environment in which banks that reduce their size and quickly build a digital-oriented business system can only survive”. Leave it, but this function will be further enhanced.”

Reporter Jeong So-ram [email protected]