Hana to turn excess bank offices into rental houses

KEB Hana Bank will turn some of its branch offices into rental houses, its parent Hana Financial Group said Sunday.

Eight branches, two in Seoul’s central Jongro and Yongsan districts, will be converted into New Stay rental homes for some 3,000 families this year. Eleven more will be added next year, it said. 

From 2018 onward, the bank plans to expand the program to repurpose 60 more branches for residential use.

“It is a win-win for both Hana and the New Stay program,” the group said in a press release.

New Stay is Korea’s housing rental program for urban dwellers, particularly newlyweds and young couples, with favorable locations in city centers, for minimum lease periods of 8 years -- with flexibility of moving out earlier -- and rental fees 90 percent of the market price. Unlike public housing, New Stay homes are owned by private companies.

KEB Hana, a merged entity between two banks KEB and Hana, has over 900 branch offices across the country, some of them overlapping.

By putting up the overlapping or unprofitable outlets for New Stay homes, the bank can slim down its branch network and unlock liquidity in those properties, the group said. The bank will sell branch properties to real estate investment trusts, or REITs, which will lead the remodeling and rental business.

The move comes as local banks are trying to reduce their physical presence, closing branches and cutting staff, as banking transactions increasingly move to online and mobile channels, and lending margins fall to record lows.

By Lee Sun-young (milaya@heraldcorp.com)