Minister Jin Nyum: Labor agreement required for company rescue

Soon any financial institution that applies for and receives public fund injections must publish a memorandum of understanding (MOU) and obtain agreement with its labor union.

Such financial institutions also will be required to include in the panel of outside advisors a member of the Korea Deposit Insurance Corp. (KDIC), which provides the public funds or its designate.

The Minister of Finance and Economy Jin Nyum announced Tuesday this as part of the Public Fund Policy Revision, stipulating such requirements, and said that the revision would be implemented in stages starting next month through changes within the KDIC and the scope of the Deposit Insurance Laws.

"The financial institutions will be required to state their BIS (Bank for International Settlements) targets on the MOU, and should they fall short of their goals, wage freezes and other measures will be taken," Minister Jin said. "In order to prevent the failure of the restructuring due to labor unions' disagreement, they (the institutions) will be required to first obtain the agreement."

The Ministry of Finance of Economy (MOFE) also decided to state the limit of the public fund assistance when the MOU is accepted. Also, should a self-resuscitation measure fail to achieve its goal, the public fund will cease immediately, the management will be censured, and the financial institution merged with a healthy institution.

A 15-member Public Fund Management Committee will be formed and will include the minister of finance economy, the minister of budget and planning, the Financial Supervisory Committee (FSC) chairman, the KDIC chairman, the Korea Asset Management Corp. (KAMCO) chairman, and the Bank of Korea governor, along with nine other non-government representatives recommended by the legislative, administrative and judicial branches.

Kwon Soon-Hwal shkwon@donga.com