Labor unions at the Financial Supervisory Service (FSS) and the Korea Deposit Insurance Corporation (KDIC) staged a rare joint press conference near Cheong Wa Dae in Seoul on Monday to protest a government plan to relocate the two institutions to Sejong, Korea's administrative capital, warning of potential financial instability and an exodus of specialized staff. The FSS examines and supervises Korea's banks, insurers and securities firms, while the KDIC administers the deposit insurance system, which protects deposits of up to 50 million won per depositor per institution, and manages the resolution of failed financial companies.

"The Korea Deposit Insurance Corporation (KDIC) and the Financial Supervisory Service (FSS) are the heart of Korea's financial stability. And yet the government says it wants to move that heart away from the center of the financial markets. If you take out the heart and put it somewhere else, can you really expect the body to keep functioning normally?" said Kim Young-heon, head of the KDIC labor union, his voice ringing out under the sweltering sun as more than 40 union members from the two organizations waved bright red placards.

"Heart transplant surgery is among the most delicate procedures, where even a single mistake can be fatal. Keep in mind that our financial system has no anesthesia and no recovery room," he added.

Government push for balanced regional development

The relocation drive is part of the Lee Jae Myung administration's push to move government agencies out of the Seoul area in order to ease the heavy concentration around the capital and promote more balanced regional development. The Cabinet is expected to begin deliberations on the plan as early as Tuesday.

Sejong, about 120 kilometers (75 miles) south of Seoul, was developed as an administrative city after the Constitutional Court in 2004 blocked an earlier plan to relocate the capital itself, and most government ministries have been based there since moving in phases between 2012 and 2014. The financial authorities were not part of that earlier relocation.

The proposal, however, has drawn fierce opposition, particularly from the unions of the two institutions. While backing the government's broader goal of promoting more balanced growth across the country, they argued that any such move should be preceded by sufficient dialogue among stakeholders and social consensus, given its potential consequences.

A central point of contention is geography. The FSS itself is headquartered on Yeouido, Seoul's main financial district, which hosts the Korea Exchange and the offices of many of the institutions it oversees. The headquarters of financial entities overseen by the FSS and covered by the KDIC are heavily concentrated in the Seoul area, as is much of the financial infrastructure supporting them, including law firms, accounting firms and specialized IT companies.

"As of March 2026, the deposits protected by the KDIC across banks, life and non-life insurers, financial investment companies and savings banks totaled 3,322 trillion won ($2.41 trillion), with more than 70 percent concentrated in Seoul and the surrounding metropolitan area," Kim said.

With so much of the financial industry based in the capital region, the unions warned that moving the two agencies outside Seoul could create a potentially devastating gap in oversight by slowing responses to financial crises and corporate failures. Financial crises have a "golden time," they said, and when every second counts, physical distance between institutions can translate directly into delays in decision-making.

"Just as shipyards need to be by the sea and airports need to be where the skies are open, every piece of critical national infrastructure needs to be located where it can perform its function most effectively," said Kim Sang-woo, head of the FSS union. "Then, isn't it only natural to conclude where the FSS, the agency tasked with closely monitoring Korea's financial companies, needs to be?"

Survey signals possible staff exodus

The unions also raised concerns about losing specialized staff, many of whom are accountants, lawyers and actuaries whose expertise has been built up over the years.

In a survey of 1,538 employees conducted by the FSS labor union, 85.6 percent said they would consider leaving the organization if it was relocated outside Seoul. Among employees under 40, the figure rose to 92.5 percent.

The prospect of relocation has also drawn attention to the burden falling disproportionately on younger workers, who are already juggling decisions about housing, family and career.

"For young workers, having the location of their workplace changed without regard for their choices could mean having their entire life plans upended — whether to delay marriage, give up having children, live apart from their families or abandon the expertise they have spent years building," the unions said in a joint statement.

Asked about the possibility of a general strike or other action in the near future, KDIC union leader Kim said they were keeping all options, including legal action, open as the situation develops.