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“Hana” means one in Korean, but the Hana Financial Group will operate with two separate banks for five years after its takeover of Korea Exchange Bank. As the new owners reached a deal with the KEB union last week, new KEB CEO Yun Yong-ro reported to his office Monday, a week after he was appointed by the HFG.
The gist of the deal made on the day before the scheduled start of a strike by the union is that KEB, keeping its present name, will have “independent management” until the end of 2016 with its employees guaranteed of their present pay scale, which is considerably higher than their new partners, and no layoffs. No Hana staff will be assigned to KEB, although some KEB executives will join the HFG board.
During the nine years since the Lone Star Funds took a controlling stake in the Korean bank, it has remained the subject of social controversy. There were doubts over the eligibility of the Texas-based buyout fund and allegations of stock price manipulation. In more recent years, the KEB union has opposed Lone Star’s moves to sell the bank first to Kookmin Bank then to the HSBC and then to Hana for huge profits.
As in the case of the Shinhan Bank’s acquisition of the older and bigger Choheung Bank in 2006, Hana’s takeover move touched the pride of the KEB employees, who valued the bank’s tradition and reputation. But, unlike in the other case, strong egotism was also involved in the KEB union’s resistance as Lone Star’s management kept pay at a higher level than the rest of the banking community after thinning the organization by about 900 employees since 2004.
The union justified its actions with patriotism opposing what it claimed the outflow of national wealth, amounting to some 4 trillion won ($3.6 billion). Neither the union nor any civic groups called for patriotism when the foreign fund made a bid to buy the bank, which faced insolvency after years of poor management.
Lone Star closed its operations in Korea with the completion of the KEB sale. It was the end of a saga in which many Koreans, including financial officials, civic activists and unionists, wrestled with the idea of “financial sovereignty” at a time when recurring global financial upheavals were telling them how meaningless national borders are in today’s world. We hope everyone has learned enough lessons from the nine-year drama.
The gist of the deal made on the day before the scheduled start of a strike by the union is that KEB, keeping its present name, will have “independent management” until the end of 2016 with its employees guaranteed of their present pay scale, which is considerably higher than their new partners, and no layoffs. No Hana staff will be assigned to KEB, although some KEB executives will join the HFG board.
During the nine years since the Lone Star Funds took a controlling stake in the Korean bank, it has remained the subject of social controversy. There were doubts over the eligibility of the Texas-based buyout fund and allegations of stock price manipulation. In more recent years, the KEB union has opposed Lone Star’s moves to sell the bank first to Kookmin Bank then to the HSBC and then to Hana for huge profits.
As in the case of the Shinhan Bank’s acquisition of the older and bigger Choheung Bank in 2006, Hana’s takeover move touched the pride of the KEB employees, who valued the bank’s tradition and reputation. But, unlike in the other case, strong egotism was also involved in the KEB union’s resistance as Lone Star’s management kept pay at a higher level than the rest of the banking community after thinning the organization by about 900 employees since 2004.
The union justified its actions with patriotism opposing what it claimed the outflow of national wealth, amounting to some 4 trillion won ($3.6 billion). Neither the union nor any civic groups called for patriotism when the foreign fund made a bid to buy the bank, which faced insolvency after years of poor management.
Lone Star closed its operations in Korea with the completion of the KEB sale. It was the end of a saga in which many Koreans, including financial officials, civic activists and unionists, wrestled with the idea of “financial sovereignty” at a time when recurring global financial upheavals were telling them how meaningless national borders are in today’s world. We hope everyone has learned enough lessons from the nine-year drama.
