Hana files for merger with KEB
Union files suit to avoid ‘unilateral’ integration
Hana Financial Group said Tuesday it had submitted documents to the financial authorities for approval of the merger between its flagship unit Hana Bank and Korea Exchange Bank (KEB), escalating tensions with the KEB union.
“On Monday, we filed documents to get preliminary approval from the Financial Services Commission (FSC) for the planned integration of the two banks scheduled for March 1,” a Hana Financial spokesman said.
If the financial regulator gives a “preliminary go-ahead” to the plan at a regular meeting on Jan. 28, Hana Financial will hold a board of directors meeting and a shareholders’ mee t ing between Jan. 29 and 30 to push forward the process to get final approval from the regulator, the spokesman said. The FSC confirmed Tuesday it had received the documents a day earlier from Hana Financial for the integration of the two banks. “We are making a quick but thorough review of the documents for the initial approval. We expect to make a final decision by Feb. 11 when there is a regulatory meeting takes place,” Lee Yun-soo, director of the banking division at FSC, said.
But there may be a delay in the planned merger because the FSC only has a regular meeting once next month due to the Lunar New Year holidays which falls from Feb. 18 to 20. It usually holds a meeting every two weeks.
Hana Financial, headed by Chairman Kim Jung-tae, said the merger may be delayed to April 1 due to a “tight schedule.”
Disagreements between Hana Financial and the KEB union over the merger remain a major hurdle to getting final approval from the FSC, analysts said.
Meanwhile, the KEB union was quick to react to the bank submitting the documents. On the same day, the union filed for a preliminary injunction with the Seoul Central District Court to keep the FSC from approving the merger.
“As talks between Hana and the union to discuss the merger have been underway since Jan. 12, it is hard to accept that Hana unilaterally sought approval,” KEB union spokesman Kim Bo-heon said.
Hana Financial and the union said they will continue talks for a breakthrough despite growing tensions over the integration.
In February 2012, Hana bought a controlling 51.02 percent stake in KEB for $3.8 billion from Dallas-based Lone Star Funds. Hana, KEB and its union then agreed to complete integration by February 2017. But now, management at Hana Bank and KEB want integration to occur two years earlier.
The banking industry has been struggling with low growth and low margins since the 2008 financial crisis. The current two-bank system does not guarantee profitability. The earlier-than-expected merger is the solution, Hana said.
KEB workers have been against the move saying it might result in job cuts.