South Korea’s major commercial lender Woori Bank will close down around 700 or 86 percent of its branches across the nation over the long run and operate just 117 branches by integrating services to stay competitive amid a fast shift to non face-to-face banking.

Woori Bank’s future strategy division selected top 117 branches by asset to go with the lender and named them ‘Value Group,’ according to sources from the financial industry on Thursday. The branches will provide one-stop services ranging from asset management to corporate lending.

It will appoint new heads of the VGs, which will be a higher position than lead branch managers but lower than executives. An official from the bank said it has to shut down some of its branches on the back of the increasing online and digital transactions, and in the end, it will ultimately have one VG per district. A massive personnel reshuffle is also expected to follow along with the branch closures.

The strategy is part of the ‘hub and spoke’ model that has been in trend in the global banking sector since 2016. The idea is that having a centrally located, full-service branch by integrating smaller locations. It could benefit both of the banks and customers as the banks can save cost and the customers can handle all kind of different tasks such as mortgage lending, group lending, asset management and inheritance at one place.

Woori Bank doesn’t have brokerage and insurance affiliates but it has more branches than Hana Bank. The lender spent 2.4 trillion won ($2.2 billion) for selling, general and administrative (SG&A) cost from January to September, higher than Shinhan Bank at 2.2 trillion won and Hana Bank at 2.1 trillion won.

The plan, however, is facing opposition from the labor union arguing that it would lead to a massive layoff. An industry source said the bank was supposed to announce the plan last month, but delayed it due to the rejection from the workers.

By Moon Il-ho and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]