By Kim Jae-kyoung
Staff reporter
Labor unions of local banks have joined forces to thwart any efforts to create a mega bank through mergers and acquisitions (M&A), threatening to stage a general strike once the government pushes for an M&A just to enlarge the size of banks.
At a joint press conference led by the unions of Kookmin and Woori Bank Tuesday, the Korea Financial Industry Union (KFIU) said that a mega bank plan could hamper the health of the financial industry and trigger another crisis by increasing system risks.
The move came two weeks after Euh Yoon-dae, the final nominee for chairman of the KB Financial Group, unveiled his scheme to create a mega bank by merging Kookmin Bank, the flagship of the group and the largest in Korea by assets, with Woori Bank, the nation's second largest lender.
"The privatization of Woori Financial is expected to be carried out in a form of block sale or M&A with other financial groups," KFIU leader Yang Byong-min said during the conference.
"If the two lenders merge, the new entity will control more than half of the domestic banking industry in terms of total assets and loans with no synergy effect. A bank merger should be done in a way to maximize synergy," he added.
If the two merge, their combined assets are estimated to reach 487 trillion won, with a total of 2,140 branches and an employee payroll numbering 46,089.
"It is a step in the wrong direction for the government to try to reshape the banking industry by enlarging the size of banks through M&A," he said, stressing that the government should leave it up to the market principle," Yang said.
"In a situation where Euh insists on pursuing the creation of a mega bank, we have no choice but to go on strike," he added.
Following his nomination, Euh, a close aide to President Lee Myung-bak and the chairman of the Presidential Council on National Branding, said that he would consider taking over Woori to create a mega bank that could compete internationally.