By Kim Jae-won
It is usually internal disputes that topple organizations.
Although the situation, by several indications, has not reached that precarious level the SC First Bank strike _ now in its third week _ is taking its toll on one of the SC Group’s biggest foreign investments.
CEO Richard Hill as well as Group CEO Peter Sands tried to dispel rumors that it would be pulling out of Korea or ditch its retail operations to devote itself to corporate banking, but, now that more branches are being forced to close due to the strike, the rumors are coming back to life.
It is not just the unions that are responsible for the dismal situation. The management is lacking the ability to handle the strike.
As a matter of fact, the management must take the initiative or risk procrastination, experts say.
SC First has about a market share in retail banking of about 5 percent, far behind the big four local competitors _ Kookmin, Woori, Shinhan and Hana _ which collectively account for about 80 percent of the market.
“What should be done first is to implement an evaluation system, which employees understand and accept,” said Jeon Hyo-chan, a senior economist from the Samsung Economic Research Institute.
SC First temporarily shut down operations of 43 branches Monday in a bid to minimize the impact of the prolonged strike.
"Until the walkout comes to an end, the branches will remain closed in a bid to ease the heavy workload placed on bank employees who did not join the strike," the bank said in a statement. SC First Bank operates 392 branches nationwide.
The Financial Supervisory Service (FSS) is also monitoring the situation by deploying officials to the lender’s IT center and branches. FSS Governor Kwon Hyouk-se ordered officials to examine SC First’s business tightly but discreetly in order to not cause any inconvenience to customers.
Some comment that the management must clean up its act and make its operations transparent.
The bank has been in trouble from financial authorities over an illegal metal loan business recently. Two SC First executives were ordered to have their salaries reduced for at least three months last week by the FSS as the lender provided platinum and palladium to six corporate customers and pocked $600,000 in commission in dealings the regulator bans.
The FSS said that SC First even tried to cheat the authorities by remitting the profits to its headquarters in London.
“SC First seems to have tried to increase its profits over the short-term by getting involved in the metal loan businesses as its general market share has stagnated,” said an analyst from a private securities company asking not to be named.
Industry watchers say those negative aspects may throw a wet blanket on the lender, which seeks to post $1 billion (1.1 trillion won) in net profits in a couple of years. SC First saw its net profit reach 137.3 billion won in the first quarter, up 32.8 percent from the same period in 2010.
Standard Chartered acquired Korea First Bank for 3.4 trillion won ($3.2 billion) in April 2005 and renamed it SC First Bank in September of the same year, the largest ever takeover for the British banking giant.