Citibank Korea set to pay huge compensation for retirees

Citibank Korea headquarters in central Seoul. Yonhap

By Anna J. Park

As Citibank Korea is planning to implement a voluntary retirement program, with employees applying for the program being eligible to receive huge compensation, market watchers are paying close attention to whether the bank's selloff plan for its retail division could make any noticeable progress.

According to the banking industry, Citibank Korea shared the specifics of its forthcoming voluntary retirement plan recently with the bank's union members, as well as the financial authorities. The program will be initialized as early as this month.

Employees with more than 15 years of work experience at the retail division as well as other divisions are eligible to apply for the plan. It is said to have suggested 65 months of salary as compensation for voluntary retirement, which exceeded the previous voluntary retirement offer in 2014 that compensated up to 60 months of salary. It was the union's position that the voluntary retirement program should offer better conditions this time.

Considering local major banks usually offer 24 to 36 months of salary as compensation for voluntary retirement, Citibank Korea's offer is far more beneficial on the part of the potential retirees. The compensation plan also includes other benefits, such as grants for children's tuition, medical checkups and support for starting new businesses.

Citibank Korea also plans to offer a sizable amount of compensation to staff members who decide to transfer to a potential buyer firm or a future acquiring company of the bank's retail division, as the employees could face deteriorated payment due to the M&A.

The main reason behind the generous voluntary retirement plan is to lessen the burden for a future buyer of the bank's retail division.

The average working years of Citibank Korea employees is more than 18 years, longer compared to local major banks, while their average salary is among the top level. As such high salaries could hinder a successful selloff, Citibank Korea aims to lower the burden through preemptive restructuring of the staff.

Currently, some 2,500 employees remain at the bank's retail division, and it is expected around 40 percent of them could leave through the voluntary retirement program. Negotiations are ongoing about the separate selloffs of Citibank Korea's credit card and wealth management divisions.

A Citibank Korea official said, "the bank has been reviewing various options for its employees including the voluntary early retirement program, but not yet decided nor shared the details with the union."