Kookmin, H&CB fail to sign merger pact

A plan for the merger between Kookmin Bank and Housing & Commercial Bank (H&CB) was placed on a verge of collapse after the scheduled signing of the contract was postponed with no time limit. The two banks were supposed to sign the merger contract at Hotel Lotte, central Seoul, Monday morning but they failed to do so after falling short of reaching a final compromise due to the resistance of financial-sector unionists and H&CB`s sudden revision of the merger contract.

That day, Kookmin Bank agreed on the contract arranged by the merger promotion committee but H&CB removed a clause calling for respecting the coordination by the committee.

The move is interpreted as a position change of H&CB that it cannot hand over a right to decision-making on important issues in the merger process to the committee, a third party, which is in turn regarded as a de facto act of denying the committee itself.

The contract is to take effect only when it is signed by both parties. However, they failed to reach a final compromise as Kookmin refused to accept the revision by H&CB. The former bank said that it has no plan at the moment to hold another board meeting to make a decision on the revision.

For the moment, the banks agreed to swap 1.688346 shares of Kookmin and one share of H&CB with one share of a newly established bank. The merged bank will be capitalized at 1.7 trillion won with 240 million outstanding shares.

Meanwhile, unionists in the financial sector threatened to mobilize all possible means to foil the merger plan unless the banks cancel the government-forced merger plan by themselves. They once occupied the place for the signing ceremony to deter the signing.

Kim Du-Young nirvana1@donga.com