Chairman Kim Jung-tai of Hana Financial Group, 3rd L, participates in a photo session on June 12 following a successful talks with the leaders of the labor union of the Korea Exchange Bank(KEB) on the merger of KEB with Hana Bank. The chairman got the agreement with the KEB union to complete the merger by Sept. 1 and name the new bank as KEB-Hana Bank. KEB President Kim Han-jo, 1st L, who touted to be the first CEO of the new merged bank also participated in the lengthy and tough talks.(Photo:Hana Financial Group)

The Hana Financial Group has been able to secure an agreement with the labor union of Korea Exchange Bank for its takeover of KEB. The launch of the new bank will now take place Sept. 1, the group announced June 13.

The financial group said it has been able to get the union of the KEB to fully agree on major areas of concern regarding the takeover of KEB, including the principle of the merger, the name of the merged bank, the merger process, joint share of synergy from the merger, stable employment terms of the merged bank and key personnel policies, among others. For two years, personnel management of the banks will be managed separately. Personnel exchange between the two merged banks will only be made with the consent of the personnel concerned, so that no harm can be done to the people of KEB. The labor union of KEB will be allowed to operate separately from the union of Hana Bank, including the rights for negotiations.

The financial group said both management and the union have agreed to implement the agreement on the merger with sincerity and trust.

The advantages of the merger will be enormous. The union will create significant synergy. As of the end of last year, the two banks combined profits came to 1.23 trillion won, just behind Shinhan Bank’s 1.46 trillion won. The newly merged bank will have solid corporate and private financial portfolios. Hana Bank has been strong in private banking while KEB’s strong sectors include corporate banking and foreign exchange business with large trading firms, which include many large conglomerates such as Samsung and Hyundai. The merger would also save operational expenses to the tune of 310 billion won annually. The IT sectors of the two banks will be integrated by next spring to save expenses. Excess personnel will be reassigned to the new bank’s other sectors to save personnel costs. President Kim Han-jo of KEB is widely expected to be named the first CEO of the new bank.

Last July, the financial group announced the early merger of the two banks, but the labor union of the KEB asked the court for a temporary halt in February this year, and the court upheld the union’s request. 

But in June, the group asked for the court to review the union’s request and the court agreed to review the decision, allowing the merger process to proceed. According to HFG sources, the agreement was the result of “secret talks’ between Chairman Kim Jung-tai of HFG and leaders of the union. The union leaders including the president of the KEB union finally agreed with the Chairman’s determination to recover the sound operation of the Korea Exchange Bank. They agreed to complete the merger by Sept. 1. The chairman was dragged to the negotiation table by the KEB union as the talks with HFG officials came to a deadlock during the weekend of July 10-13. The key differences revolved around such matters as the employment of new staff and the separate personnel policies for Hana Bank and KEB after the merger. The union leaders wanted a direct meeting with the HFG chairman to settle the matter.

The chairman looked disheveled and tired from the overnight talks with the KEB union leaders. He met with reporters at 2 p.m. on July 13 following the successful conclusion of the talks with the KEB union, after thrashing out differences through direct talks between the union leaders and chairman of HFG.

The first words out of Kim’s mouth was that he found union leaders to be sincere, adding that there was not much difference dividing the HFG officials and the union. Kim said he appreciated the KEB union leaders for accepting his words, although he did not have the materials from the talks. Kim said he found that the ultimate purpose of the two parties was the same. The only difference was the way in which it was achieved.