Chohung Bank`s Electronic Network May Be Suspended

More than half of Chohung Bank`s branches around the nation have suspended business as strikes have been ongoing for the third consecutive day, individual and corporate customers are suffering from great inconvenience as a result.

Customers are withdrawing their money from ATM machines, facilitating the bank`s immediate lack of cash flow.

The situation is wreaking havoc on many small and medium-sized companies as the bank is not able to issue letter of credit nor purchase export products for bills of exchange.

The government, the Shinhan Holding Group and Chohung Bank`s labor union failed to reach a consensus at their first meeting on June 20. They plan to have a second meeting this weekend, which will become an important watershed in resolving the current situation.

According to the Financial Supervisory Committee and Chohung Bank on June 20, some 52.4 percent of the total branch offices, or 249 out of 476, closed their doors. However, the remaining branches cannot conduct normal business due to the lack of employees.

The bank`s remaining deposits have been reduced by 5 trillion and 480.9 billion won from 48 trillion and 30.7 billion won on June 11 to 42 trillion and 549.8 billion won on June 19. It is estimated that some 800 to 900 billion won was withdrawn from the bank during the day of June 20.

As 25 regular workers that remained at the electronic center decided to join the strike, there is an increasing possibility that its electronic network may be paralyzed.

According to the Financial Supervisory Committee, only 71 workers including substitutes are left in the bank`s electronic center where 329 workers originally worked.

Big companies including Kumho and Lotte Group using Chohung as their major credit bank are scrambling to come up with alternative measures to prevent any serious situation in case the bank`s electronic network stopped operating properly.

Local courts including the Supreme Court in Seoul are also big customers of Chohung Bank, so they will fall victim to the current situation.

The Court said that there would increasing confusion in paying for various deposits and security money as well as auction payments.

Therefore, the FSC decided to have other banks serve as an alternate for Chohung in case Chohung`s normal business rate falls below 25 percent.

The Bank of Korea will additionally fund 3 trillion won on the 23 if the bank needs more money resulting from a continuous money withdrawal by its customers.

The police are considering whether to stop the strikers by force this weekend.

Kwu-Jin Lim mhjh22@donga.com