Chohung Bank Normalizes Operations

The general strike of Chohung Bank, which could bring about a complete shutdown to its computer system, was resolved as the unionized workers` demands for job security were accepted.

As a result, Chohung Bank will be back to normal operations on June 23. The state-owned bank will be privatized as an affiliate company of Shinhan Financial Group as early as the end of August.

The walkout, however, is likely to have an adverse impact on the nation`s credit rating and continued trade union strikes.

The trade union of the bank said on June 22 that they cut a deal with Shinhan Financial Group to end the strike and return the 340 staffers of the main computer center in Nonhyun-dong, Seoul, to start normal operations from June 23.

The unionized workers cast a vote on the negotiated proposal from 5:30 a.m. on June 22. A total of 3,148 (59.09%) out of 5,033 voted for the proposal.

Accordingly, five representatives of the Tripartite Committee, including Financial Industry Trade Union Chairman Lee Yong-deuk, Shinhan Financial Group President Choi Young-hui, Chohung Bank President Hong Seok-joo, Chohung Bank Trade Union Chairman Heo Hung-jin, and Korea Deposit Insurance Corporation President Lee In-won, signed an agreement composed of 10 articles at the Korea Federation of Banks in Myoungdong, central Seoul, covering independent management for the next three years.

The Tripartite Committee had a five-hour-long bargaining session on the previous day to come to an agreement to the three-year independent management of the bank including the computer system, job security and exclusion of cutbacks on manpower. In addition, the integration promotion committee will discuss the matter after two years and the integration should be made within a year.

The committee also talked about the nomination of a president from Chohung Bank before the integration, a gradual increase in wages for three years to the same level of Shinhan Bank (annual 30%, 30%, and 40% increase from this year with rates negotiable according to the financial condition), the same number of people making up the integration promotion committee, and the same number of people in the holding company’s directors from the two sides.

Chohung Bank decided to minimize legal action against unionized workers regarding the walkout.

The Korean Confederation of Trade Unions (KCTU) Chairman Lee Nam-soon was satisfied with the result, saying that the sale was not withdrawn but was successful to have cut a deal on job security and equal merger principle. Meanwhile, President Choi said that he would remain prudent since the unionized workers were sensitive at the moment.

The Korea Deposit Insurance Corporation and Shinhan Financial Group will cut a contract around June 25. The financial group will finish financing within one or two months to incorporate Chohung Bank at the end of August.

Kwu-Jin Lim Do-Young Kim mhjh22@donga.com nirvana1@donga.com