KEB Card Continues to Halt Cash Advance Services

Korea Exchange Bank Credit Service Co. (KEB Card) halted cash advance services for two consecutive days.

Korea Exchange Bank, KEB Card, and KEB Card labor union failed to resume the card unit’s cash advance service on Tuesday due to a disagreement on the labor union’s strike. KEB demanded that the labor union stop its strike against KEB’s takeover of its card unit in return for a fresh cash injection, while the union took a strong stand against the takeover.

“We are now providing cash advance services to 240,000 customers with good credit records out of 2.51 million total customers,” said a KEB official. “We hope that both sides will come to an agreement by Wednesday.”

When both sides finally agree on resuming cash advance services, KEB will either directly inject fresh money to KEB Card under the agreement of the Financial Supervisory Service or issue a letter of comfort to ask other banks to lend money to KEB Card.

“However, the halt might continue if KEB aims to reduce non-performing loans before the takeover and if the labor union fails to compromise,” said Lee Jun-jae, an analyst at Dongwon Securities.

Meanwhile, KEB Card said that monthly customer payments due between December 23 to 27 could cover 180 billion won of corporate bonds and commercial papers maturing by the end of this year.

Shares of KEB closed at 6,100 won, down 2.09 percent, while KEB Card was down 1.25 percent to 3,150 won.

Suk-Ho Shin Ji-Wan Cha kyle@donga.com cha@donga.com