HSBC faces union resistance over sales talks with KDB

By Kim Jae-won

While HSBC Korea examines the possibility of selling its 11 retail branches to the state-owned Korea Development Bank (KDB) Financial Group, its unionists vow to use every means at their disposal to see the move fail.

Industry sources say HSBC’s trade union has repeatedly attempted to discuss the issue with management, only to be ignored by those in the executive suites, who have yet to officially admit negotiations with KDB.

HSBC’s self-imposed silence is awkward as KDB has been talking publically about its intentions to absorb the British banking giant’s local retail outlets.

``Management continues to refuse to talk with us on their plans to sell our retail units to KDB. They say it’s just a rumor, although KDB has already admitted to the media that there have been negotiations,’’ said an official from HSBC’s union.

There is uneasiness among HSBC employees about their foreseeable future, with rumors swirling about KDB converting some staff to temporary status after an acquisition, although the union official denounced the scenario as absurd.

KDB Chairman Kang Man-soo said earlier this month that his company is in dialogue with HSBC over taking over 11 of its retail branches. Kang said that negotiations are going well and that he will be able to announce ``good news’’ soon.

Yoon Man-ho, executive vice president of KDB, who has been leading the talks, denied rumors that the bank is considering making some HSBC workers’ status precarious.

“It is not true,’’ Yoon said bluntly but declined to talk specifically about the current state of negotiations.

Industry watchers say KDB is taking the initiative in the negotiations as the 11 retail branches are not that many for the group while HSBC is eager to sell them to focus on its strengths.

KDB, which had focused on investment banking, is looking to enlarge its deposit base ahead of its privatization thorough an initial public offering this year.

HSBC Korea has earned big profits from corporate financing while retail banking has been shadowed by bigger domestic rivals of Kookmin, Woori, Shinhan and Hana.

HSBC sought to acquire the Korea Exchange Bank (KEB) from Texas-based Lone Star Funds in 2008 to expand its presence here but gave up when the global financial crisis hit the world at that time.

HSBC is selling its retail branches in the other parts of the world. It closed its retail business in Russia last year discarding its longtime slogan of “the world’s local bank” based on its wide network of international retail outlets.

According to a Bloomberg report, the lender announced 14 transactions last year, including the sale of a U.S. credit card business valued around $32.7 billion, a Chilean retail bank and a Hungarian consumer-finance portfolio. It’s also selling operations in Georgia, Iraq and Poland.