South Korean bank workers decided Friday that they will stage a one-day strike late this month to protest a potential merger between the country's two large banking groups, an industry association said.
The government is seeking to privatize Woori Finance Holdings Co., South Korea's top financial services company, in a bid to recoup the massive public fund injected into the company. Speculation has risen that No. 2 player KB Financial Group Inc. may move to merge with Woori Finance.
Following the recent breakup of collective bargaining, more than 90 percent of the unionized workers at local banks approved a motion to strike on July 30, the Korea Financial Industry Union (KFIU) said.
It would mark the first strike by the banking sector in 12 years.
The KFIU is an umbrella labor group for unionized workers at South Korean banks and financial firms.
"We oppose the creation of a large-sized bank by pushing for a hasty privatization of Woori Finance in the final year of the incumbent president," the KFIU said in a statement.
"Bigger banks are vulnerable to a financial crisis and potential failure of such banks can deal a heavy blow to the country's economy."
The union called for the government to ditch its plan to create a so-called mega bank by allowing the two banking groups to merge. If their demands are not accepted, banks' unionized workers plan to stage a slowdown on Aug. 1 and strike again on Aug. 3.
The union also demands a 7 percent rise in wages and a cut in working hours.
A potential merger between KB Financial and Woori Finance is a hot issue in the Korean banking sector amid heated debate over whether the birth of a mega financial firm will help raise the industry's competitiveness.
The sale of Woori Finance fell through in 2010 and 2011 due to a lack of investor interest. But the government is seeking to wrap up the sale of its 56.97 percent stake in Woori Finance within this year.
The privatization of Woori Finance has been one of the top priorities pushed by the government of President Lee Myung-bak and the idea of creating a mega bank was previously floated by the government, but it ditched the plan following the 2008 global financial turmoil.
If KB Financial, whose assets stood at 285 trillion won (US$248 billion) as of end-March, merges with Woori Finance, the total assets of KB Financial will likely rise to more than 600 trillion won.
Supporters of creating a super-sized bank argue that it will help raise Korean banks' global competitiveness, given that local lenders cannot be found on the list of the world's large banks.
But opponents claimed that the move is bucking a global trend of splitting big financial firms into smaller ones following the global financial crisis.