Major banking group Hana Financial Group Inc. said Monday that it plans to complete a merger between its two banking units -- Hana Bank and Korea Exchange Bank (KEB) -- before October as KEB's labor union has agreed on the proposed merger.
Hana Financial has been pushing for the merger since its acquisition of KEB from U.S. buyout fund Loan Star in 2012 but faced strong opposition from the KEB union, which claims Hana had promised to allow an independent management for five years.
In February, a Seoul court issued an injunction banning Hana Financial from engaging in any merger processes, citing its earlier promise with KEB's union.
But an appellate court ruled in favor of Hana Financial last month, dismissing the earlier court's injunction, to pave the way for the company to resume the talks with the labor union.
"(We) reached an agreement on the principle of the integration, name of the united bank, the procedure and synergy sharing of the integration, and guarantee of job security," Hana Financial said in a filing.
"We also decided to implement the agreement with sincerity based on the principle of good faith."
A Hana Financial official said the united entity will be launched before October.
Meanwhile, Hana Financial filed a request with the Financial Services Commission (FSC), the country's financial regulator, for merger approval. The FSC has stressed that mutual consent between Hana Financial and the KEB union is a prerequisite for approval.
"The FSC received a request for preliminary approval from Hana Financial," the FSC said in a statement. "The FSC will take administrative and regulatory steps."
It will take 60 days for the regulator to give preliminary approval and another 30 days for official sanction.
The integrated Hana-KEB bank is expected to emerge as the largest lender by assets in South Korea. Their combined assets stood at 290 trillion won (US$256.2 billion) as of end-March, outpacing Kookmin Bank with assets of 282 trillion won.
Shares of Hana Financial traded at 29,450 won on the Seoul bourse as of 11:15 a.m., up 2.08 percent from the previous close, with the benchmark KOSPI gaining 0.42 percent. (Yonhap)