At a meeting on Oct. 29, the boards of both Hana Bank and Korea Exchange Bank, affiliated with Hana Financial Group, agreed to merge the two affiliate banks by February next year at the latest.
The boards agreed on the merger ratio of one Hana Bank share to 2.92 shares of the KEB, but the Korea Exchange Bank Law will continue to be maintained.
The name of the newly merged bank has yet to be decided. However, most experts think the merged bank will retain the name Hana Bank. The decision ultimately rests with the Merger Promotion Committee.
Hana Financial Group will soon submit an application to merge its two banking affiliates to the Financial Service Commission (FSC). Officials of Hana Bank said they expect the FSC to approve the merger application within the year.
HFG Chairman Kim Jung-tae said the merger must be concluded by year-end to give enough time for other matters such as the integration of the electronic banking systems of the two banks, which should be completed by the end of next year so that the account transfers, which are scheduled to start from 2016, can go smoothly.
The boards of the two banks agreed that the merger is the best way to overcome the current “low-interest crisis” in the banking community. On their own, the two bank systems cannot overcome the prolonged low-interest period.
The banks’ unions have opposed to the early merger plan, but recently said they are willing to discuss the merger. The union of KEB, in a media interview at the Korea Federation of Banks building in Myeong-dong, downtown Seoul, said it is agreeable to discuss the early merger and the related issued with KEB’s management. President Kim Keun-yong of the KEB union said they are ready for talks on the early merger and other matters for the sake of the development of the banking industry in Korea as a whole. He said they would like to have the results from the union-management to bring benefits to all the employees of KEB.
The union has been opposed to the early merger, insisting the original plan be carried out, which was five years of independent operation for KEB. But the HFG has decided to go ahead with the meeting of the boards of the two banking affiliates, saying they welcome the union’s decision to come to the table once again and discuss the early merger.
Sources close to the banking industry feel that the union may be trying to stall the merger plan. Many in the community, however, agree that the union’s move is a positive one for the merger.
HFG plans to approve the agreement reached by the boards of the two banks and submit a merger application for approval to the Financial Service Commission early next month, with the FSC to approve the application within two months. If that happens, the merger could be concluded by the end of this year.
It is unclear if the merger can proceed on schedule as the HFG still has issues to work out with the unions of the banks, which have a lot of sway. The unions have already criticized the two-track plan, whereby the banks pursue a merger and simultaneously seek agreements with the unions, by saying that the HFG has no intention to hold genuine talks with the union and go about the merger unilaterally.
HFG is highly encouraged by the fact that the merger of its two banking affiliates has not been picked for questioning at the parliamentary audit of the government.
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