Banks to lay off 3,000 employees

A total of 3,000 employees at six major banks, including Cho Hung, Hanvit, Korea Exchange, Peace, Kwangju and Cheju, are expected to be laid off sooner or later. Those banks are required to submit normalization plans by the end of this month.

In addition to these six banks, blue-chips banks such as Kookmin and Housing & Commercial are expected to voluntarily merge, so staff reductions at these banks are inevitable. Of course, trade unions strongly oppose the downsizing.

Korea Exchange Bank's management and trade union agreed Wednesday to layoffs of 13.4% of the workforce or 910 employees under an early-retirement program.

The bank plans to compensate those retiring employees, including executives, with 10% of remaining workers' salary for the next year, but details of the layoff scheme are still under negotiation with the union.

Hanvit Bank already has informed its union of its intention to lay off 14.5% or 1,555 employees. Cho Hung Bank, which satisfied the BIS-based capital adequacy ratio of more than 10%, is expected to lay off 200 workers to demonstrate its will for management reform.

Besides, Peace Bank, Kwangju Bank and Cheju Bank are seeking 10% to 15% layoffs, although it doesn't seem easy to reach agreements with unions.

The Financial Supervisory Commission is demanding that banks attach an agreement with unions related to the layoff plans. The FSC is asking for self-restructuring efforts as a condition to obtain public funds from the government.

In this connection, the union of the banks claimed that any further reductions in manpower would make it impossible to properly run the banks. Unions say that it is difficult to persuade union members to further tighten their belts because there is no guarantee that this will be the last layoff.