Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Watchdogs' intervention on Citibank Korea comes under fire
Citibank Korea's head office in Seoul. Yonhap
By Lee Min-hyung
By Lee Min-hyung
The country's financial watchdogs are coming under fire for their moves to actively intervene in the process of Citibank Korea's phased shutdown of its retail banking operation.
The Financial Services Commission (FSC), the country's top financial policy regulator, responded quickly to the lender's announcement that it would halt its consumer banking services. After the announcement, the FSC immediately ordered the lender to submit specific plans to guarantee customer protection before taking steps for the shutdown.
But industry sources said it is already too late for the authority to manage the fallout from the Korean subsidiary of the U.S. banking group's decision.
“It is questionable whether the authorities have remained active in helping Citibank find a middle ground during the past six months before the lender made the decision,” an industry source said, Wednesday. “Even if the authority shared its plan recently to thoroughly monitor whether Citibank Korea takes steps to protect customers, the lender's employees and customers will inevitably fall victim to the shutdown in many ways.”
It has been six months since Citigroup announced its exit plan for 13 countries, including Korea, but the Korean subsidiary had to embrace the worst-case scenario after failing to find an investor to take over its consumer banking business.
Signs of a possible dispute among its employees are already appearing following Citi's announcement. As was widely expected, the union of Citibank Korea opposes the lender's decision, calling the move “careless and irresponsible.”
“Citibank Korea decided carelessly to shut down its consumer banking after just pretending to protect consumers and guarantee job security,” the union said, Wednesday, asking the authorities to block the lender's decision as the end of its consumer banking will result in the layoff of some 2,500 employees.
The FSC is reviewing whether Citibank Korea's decision is in line with a local banking act. The watchdog is the key authority to decide on whether to grant approval for Citibank's move.
Regardless of the FSC's decision, there are no other options for the lender, as it has failed to find a potential buyer to acquire the unit with a guarantee of employment security.
Some others also argue that Citibank Korea's top management was under too much political pressure to ensure the job security of employees. A group of ruling party lawmakers met recently with Citibank Korea CEO Yoo Myung-soon. Yoo was asked by them to place the lender's top priority on ensuring employment stability while pushing for the sale of the business.
“The financial industry is vulnerable to political pressure, so the lender had to find an investor willing to guarantee the job security of existing employees, but the precondition must have been seen as a big cost burden to companies that expressed interest in the deal,” another industry source said.
Citibank Korea's average annual employee salary reached 112 million won ($95,600) as of the end of 2020. This was much higher than that of the nation's top four commercial lenders. On top of that, the average years of service among Citibank Korea's employees came in at 18.2, which is slightly longer compared to other big banks here.