On the 63rd floor of the Busan International Finance Center (BIFC), D-Space sits empty—a stark symbol of South Korea's struggling ambitions to build a global financial hub outside Seoul.
The office space, created by Busan city to attract foreign companies, had just two tenants when visited on January 10: Citibank Korea and British insurance broker UIB Korea. The lobby was deserted. No staff. No visible workers in the occupied spaces.
D-Space offers free office space for up to 25 years in three-year terms. Yet five institutions that moved in between 2021 and 2023 terminated their contracts early. U.S. firm Lina One withdrew last May. Only recent commitments from ship broker Clarksons Korea and maritime finance specialist Waterline Partners have reduced vacancies.
The numbers paint a grim picture of foreign bank activity.
Outstanding loans from foreign banks in Busan totaled just 200 million won ($140,000) at the end of last year, according to the Bank of Korea's Busan branch. That figure stood at 80 billion won in 2021 and dropped to 49 billion won by 2022, before collapsing to its current level in June 2024.
Foreign bank branches in Busan have dwindled from seven in 2001 to just one today. Metro Bank left in 2021. Yamaguchi Bank followed in 2024. Only Industrial and Commercial Bank of China remains.
"Busan's international finance ecosystem is regressing," the Busan International Finance Promotion Agency acknowledged—a remarkable admission from the body responsible for developing the city's financial hub strategy.
The government designated Seoul and Busan as financial centers in 2009, providing tax incentives and infrastructure support.
But governance has faltered. The Financial Center Promotion Committee, tasked with policy coordination, held just 13 meetings between 2020 and 2025, according to data obtained by Democratic Party lawmaker Lee In-young. Only two were in-person sessions. The rest were conducted in writing. Meeting frequency dropped from four in 2020 to just one each in 2024 and 2025.
"The disappointing reality is that financial hub cities are not coordinating properly with each other," said Kang Kyung-hoon, a business professor at Dongguk University and former committee member. "Government must set the overall direction."
The push for coordination has grown more urgent since Jeonju announced plans to become a third financial center. Without clear leadership from the Financial Services Commission, experts warn that superficial political issues—like relocating financial public institutions—could derail strategy.
Industry observers point to the United Kingdom's approach as a model. Britain divides financial services across 11 regional clusters, each with specialized industries. A similar division could work in Korea.
"We could concentrate back-office operations and data centers in areas with lower land costs," Kang suggested.
Cross-border partnerships offer another path forward. Lee Hyo-seop, head of the financial industry division at the Korea Capital Market Institute, proposed that Busan could create a joint maritime finance zone with Japan. Jeonju could pursue partnerships with China in asset management, energy, and venture finance.
Ideas are emerging locally. Some advocate establishing specialized maritime finance institutions. Others point to Dubai and Astana, which operate common-law financial regulations in special zones and offer corporate and income tax exemptions through the mid-2060s.
