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Shinhan Bank revealed its plans to get rid of more than three dozen bank branches before the year ends. It was reported that the financial institution cited the high operating costs and decreasing interest income as the reasons for the decision.
The Korea Times mentioned that Shinhan Bank actually closed down six branches already, and it was announced that 40 more are set to be discarded in the second half of 2021. This means that the total number of banks to be shut this year is close to 50.
Shinhan struggling to keep up with the costs
Shinhan Bank is the very first bank recorded in the history of South Korea however, it was reported to be falling behind in terms of digitization since it still offers services in the traditional way. Upgrading all the banks it owns will cost a lot, so most of the branches are not digitized.
Moreover, it was said that the financial institution spends around ₩1.7 billion or about $1.4 million per year to maintain and keep just one branch open in a commercial spot in Seoul. With this amount, it surely shows why it is struggling to keep with the operating costs for dozens of branches.
"It is difficult to find a reason to operate costly branches since key services are available online,” an official from Shinhan Bank said. “We will continue to maintain stellar customer services."
It is not just Shinhan that is discarding bank branches these days. In fact, three other premiere banks in South Korea that include KB Kookmin, Woori Bank, and Hana Bank, have plans of shutting a number of outlets too. Along with Shinhan, these are the five major commercial lenders, and they are about to shut a combined total of 160 branches this year.
Shinhan’s voluntary retirement plan
In any case, with the upcoming closure of 40 Shinhan Banks, many of its employees will surely lose their jobs. This is why the applications for voluntary retirement in Shinhan have increased.
This plan is said to be sought out by younger employees so they can leave the companies with higher severance pay. Korea’s News Directory3 reported that Shinhan Bank accepts voluntary retirement applications for staff who are 49 and older and have worked for the company for over 15 years.
“The opinions of on-site employees to expand the target of voluntary retirement has continued, and we have decided to review it to support the needs of employees and the stable second life of employees,” a bank official said. “We plan to provide continuous support, such as providing a variety of support such as health checkups and care.”
