Shinhan Bank to shutter 40 branches this year

Shinhan Bank plans to close down at least 40 offline branches in the second half of this year, due to high operating costs and plummeting interest income amid ultra-low lending rates, local banking sources said, Wednesday.

The bank has already closed six branches so far this year, meaning the number of branches to be shut down could reach close to 50 by the end of the year.

The moves means Shinhan will no longer be singled out as falling behind compared to other banks in the digitization drive spearheaded by the financial industry.

It costs Shinhan Bank up to 1.7 billion won ($1.4 million) a year to keep one branch open in a commercial area of downtown Seoul.

“It is difficult to find a reason to operate costly branches, since key services are available online,” a Shinhan official said.

Shinhan Bank closed down 21 branches nationwide last year, while rival KB Kookmin Bank shut down 64 over the same period. Hana Bank and Woori Bank closed down 74 and 58 branches, respectively. The number of branches Shinhan closed down every year averaged eight from 2015 to last year, which was smaller than KB Kookmin Bank (33.2), Hana Bank (56.6) Woori Bank 27.

The county’s top four major commercial lenders plan to close down a combined 160 branches this year, said the sources. KB Kookmin will shut down 50, followed by Woori Bank (35) and Hana Bank (28).

On a related note, commercial banks are rushing to reduce their workforce by instituting a hiring freeze and increasing applications for “voluntary retirement.”

Voluntary retirements are increasingly sought by younger workers who view leaving the firm with tens of millions of won in severance pay as being far better than continuing to work with diminishing prospects of promotion.

Over 100 Shinhan Bank employees applied for voluntary retirement between June 10 and 14, raising the number of those leaving the firm to over 300 in the first six months of this year.

A combined 1,500 people left their jobs between January and February at KB Kookmin Bank (800), Shinhan Bank (220) and Woori

Bank (468), according to data provided by each bank. Part of them are seeking new jobs at fintechs and internet-only banks amid rapid digitization.