| Seoul's financial district Yeouido's next landmark the Parc1 complex, left, and International Finance Center Seoul. / Korea Times file |
By Anna J. Park
Yeouido has long been the central financial district in Seoul, harboring dozens of major securities firms and key financial authorities such as the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS). Since the nation's bourse operator the Korea Exchange (KRX) relocated to the district in 1979 from Myeong-dong, Yeouido's growth as a financial hub in the country has solidified.
Back in the late 2000s, the Korean government ambitiously announced its long-term plan to make Seoul the financial hub of Northeast Asia, centering on Yeouido. The region's landmark International Finance Center (IFC) Seoul was part of the Seoul Metropolitan Government's plan to attract foreign financial companies to the region.
Fast-forward to the present, however, and Yeouido seems to be falling short of becoming the financial center of Seoul, let alone the hub of Northeast Asia. The region is clearly home to most securities firms and asset managers in the nation, yet most foreign financial companies' branches and the headquarters of banks are located in the Gwanghwamun area of central Seoul.
| Centropolis, left, and Seoul Finance Center located in Gwanghwamun area in Seoul / Yonhap |
Foreign financial firms' long-time preference for Gwanghwamun
The local branches of many global financial institutions, such as Bank of America, Nomura Securities, BlackRock Korea and ING Bank in Korea, center their operations at the Seoul Finance Center, while other major players ― Goldman Sachs Korea, Morgan Stanley and JP Morgan Korea ― are located in nearby buildings in the neighborhood.
The newly opened Centropolis building has also been drawing in many global firms. UBS, Deutsche Securities, Credit Suisse, Carlyle and Macquarie, among others, have already moved into or decided to relocate to the new building.
According to industry sources, one of the reasons why foreign financial firms prefer downtown to Yeouido is that the region provides better access to their main clients ― headquarters of big conglomerates and major banks in Korea.
"As foreign financial firms mostly deal with wholesale and investment banking in Korea, they do not have any special reason to stay on Yeouido, where domestic securities firms, state-run institutions and the financial authorities are located," an industry source told The Korea Times.
Industry sources also said one of the other reasons foreign financial firms prefer Gwanghwamun has been that they put utmost priority in achieving a stable computing infrastructure environment; not many buildings on Yeouido, built back in the late 90s or early 2000s, were well-equipped with top-of-the-line communication infrastructure.
Another market insider told The Korea Times that the Gwanghwamun area itself does not provide foreign financial firms a particular edge over Yeouido, but has produced agglomeration effects ― firms from the same industry locate nearby to create maximal network effects ― leading them to the region.
Resurgence of Yeouido as fintech-centered district?
The Seoul Metropolitan Government has been pushing to attract more foreign financial firms or major financial institutions back to Yeouido. An official from the municipal government told The Korea Times that the city is currently negotiating a deal with IFC Seoul, aiming to provide offices there for free or for a much lower rent price to major global financial firms. The rent-free policy is slated to be officially announced as early as sometime next month.
"In an effort to draw in more major financial institutions from both within and outside the country, the Seoul Metropolitan Government is currently reviewing a plan to provide rent-free offices or allow beneficial conditions of much lower rents at the IFC Seoul for influential financial companies that could contribute to the country's financial sector," the official said.
The official added the benefits could be offered to both foreign and domestic financial institutions following an assessment. He also explained that many financial firms have shown their intention of relocating or moving into the building during their preliminary demand research.
The city official additionally emphasized that currently about 70 fintech startups are located in Yeouido's WeWork building. The city government plans to expand support for similar innovative fintech businesses, aiming to invigorate the region's network effects.
Besides the city government's efforts, eyes are now on whether the opening of the Parc1 complex ― another landmark in the district ― could function as another factor attracting financial companies back to Yeouido.
Parc1 is composed of four main buildings ― two office towers, a hotel and a department store. The 56-story office building has been sold to NH Investment & Securities, which plans to relocate its headquarters into the building by next April.
"About half of the building will be used by NH Investment & Securities and other NH affiliates," an official from the firm told The Korea Times, adding that many institutions are showing interest in renting offices in the building.
The Canada-headquartered Fairmont Hotel will open its first business in Korea at the complex, and Hyundai Department Store will open its largest branch in Seoul at the site next January, improving the region's living conveniences in general.
In addition, Yeouido's new post office building is slated to open by December this year as a high-rise prime office building, offering more options for overseas foreign firms planning to advance into the Korean market.
"Foreign financial companies prefer a state-of-the-art building, as they can provide a more stable environment for computing infrastructure, as well as favorable working conditions," a market insider pointed out, saying Yeouido could gain momentum again, as seen from the flow of foreign financial firms' relocation towards brand-new buildings like Centropolis in central Seoul.