Shinhan Bank will halt sales of its dedicated deposit product targeting land compensation funds starting next month. Analysts interpret the move as a strategic decision to streamline channels for real estate-related fund inflows and shift the direction of asset management.
According to financial industry sources on Thursday, Shinhan Bank will discontinue sales of its "Premier Land Compensation Dedicated Savings Deposit" and "Super Savings Deposit" starting the 20th of next month.
These products are representative deposit offerings that banks competitively rolled out around 2010 to attract land compensation funds generated from public housing developments and similar projects. Shinhan Bank first launched the product in 2009 and operated it until 2013, then resumed sales in 2020 after a revamp.
Land compensation deposits have served as a channel to draw in large sums of money over a short period while securing high-net-worth clients. New inflows grew from 52.9 billion won in 2021 to 60.4 billion won in 2022 and 289.7 billion won in 2023, then maintained a 200 billion-won range with 237.3 billion won in 2024 and 231 billion won last year. The product also featured a structure that provided tax consulting, real estate advisory, and compensation bond sales support to customers depositing above a certain threshold, securing clients and channeling them into investment products.
However, the product's share in the bank's total deposit base was limited. Compared with regular term deposits that sell several million accounts annually, land compensation deposits were closer to a product concentrated on a specific customer segment. This is why industry observers say the product functioned more as a channel to bring in private banking (PB) clients than as a means of expanding deposits.
Shifts in the market environment have also played a role. Land compensation volumes at the Korea Land and Housing Corp. (LH), which accounts for a large share of public housing projects, have been declining rapidly. According to data submitted to Rep. Kim Jung-jae of the National Assembly's Land, Infrastructure and Transport Committee by LH, land compensation payments plunged from 5.88 trillion won in 2023 to 1.11 trillion won as of the end of August last year. With compensation inflows themselves shrinking, the role of related products inevitably contracts. A Shinhan Bank official said, "We judged that growth potential is limited, and this is part of streamlining our products and services."
Still, many in the industry are reluctant to view the move as mere efficiency-seeking. Given that sales in the 200 billion-won range had continued until recently, discontinuing a product that had been maintained is being read as a signal of a shift in financial strategy. The move is seen as aligned with a broader trend of reducing deposit products aimed at real estate-related fund inflows and shifting the focus of fund management to other areas.
Concerns about asset structure transformation have indeed been raised within Shinhan Financial Group. The Shinhan Financial Future Strategy Research Institute diagnosed in its report "What Will Change When Housing Prices Stabilize" that the inequality structure of Korea's economy is concentrated in assets, particularly real estate, rather than income. The analysis holds that, in a structure where roughly 70 percent of household assets are tied up in real estate, rising home prices have widened disparities and acted as a constraint on consumption.
The report suggested that if such a structure eases, changes could also appear in fund flows. Housing price stabilization could boost households' spending capacity and serve as a catalyst for funds to move from real estate to other investment areas such as capital markets.
Shinhan Financial Group Chairman Jin Ok-dong expressed a similar view in his shareholder letter. "When housing prices stabilize, household assets will shift toward capital markets as an alternative," Jin said. "Productive finance, including corporate lending, can become a new engine for asset growth."
Viewed in this context, the discontinuation of the land compensation deposit reads as a strategic adjustment to reduce channels for real estate-related fund inflows while broadening the direction of fund management toward corporate investment and capital markets. The move also appears to reflect a shift toward strengthening direct client management through PB channels rather than attracting customers through products.
"Land compensation deposits were not large in scale, but they were a product with symbolic ties to real estate funds," a financial industry official said. "Recently, there has been a trend of gradually lowering the weight of real estate-related finance and shifting portfolios toward corporate finance and investment."
