Kookmin Bank severance pay stirs dispute

Controversy is flaring up over the proposal by the management of Kookmin Bank to pay huge amounts of severance payments to its officials who will resign on the condition that they accept the merger with Housing & Commercial Bank.

A rumor circulated Wednesday night that the announcement of the merger of Kookmin Bank and Housing & Commercial Bank was imminent, but Kim Jung-Tae, CEO of Housing & Commercial Bank, denied it, saying that the merger negotiations were suspended.

Kookmin Bank executives promised Wednesday through an e-mail message with the subject line, ¡°Materials on explanation related to merger,¡± that the bank would guarantee the stability of employment to the maximum extent, stressing the necessity of the merger.

In an inevitable case of manpower reduction, however, they said that the bank would pay huge amounts of severance pay, the highest in the banking industry, to officials who will resign voluntarily or accept relocation by establishing a large securities company and an insurance company without carrying out compulsive retirement.

¡°It reflects the management¡¯s attempt to announce the merger first regardless of the means and ways, bowing to the government¡¯s pressure,¡± Lee Kyung-Soo, head of the labor union of Kookmin Bank, said. ¡°Will the merger without manpower reduction have an effect?¡±

In the meantime, a rumor circulated rapidly Wednesday afternoon that an announcement of the merger of Kookmin Bank and Housing & Commercial Bank would be made at 8 p.m., but it proved to be groundless later.