Hana, KEB heads embark on early merger of two banks

The heads of Hana Bank and Korea Exchange Bank (KEB) agreed in a joint statement on Tuesday to speed up the merger of the two local lenders, which has faced stiff opposition from KEB's union.

Hana Bank President Kim Jong-jun and KEB President Kim Han-jo signed a joint statement announcing the official beginning of the integration process to "end confusion and strengthen competitiveness," according to an emailed press release.

The move is the latest in efforts by the two banks' management to drum up support for the integration of both banks that belong to financial giant Hana Financial Group.

The banking group acquired KEB from U.S. buyout firm Lone Star Funds for 3.9 trillion won (US$3.8 billion) in early 2012 but has postponed the integration process amid strong protest from KEB employees.

Hana Financial and the KEB union have already agreed on post-takeover terms, under which the former will run KEB as an independent entity and maintain its current brand and wage system until 2017.

In the joint statement, the two heads urged KEB's union to take part in the integration process.

"A speedy integration is inevitable for the bank to become the country's best lender," the Hana Bank chief said. "We will step up efforts to reflect opinions on the terms of employment."

KEB chief Kim also said the union should begin talks as soon as possible to sustain stable work conditions for KEB employees.

Following the joint statement, the two banks are expected to open a board meeting next week ahead of establishing a committee for the integration and getting approval from shareholders.

The KEB union reaffirmed its firm will to oppose the move that is "a clear violation" of the post-takeover terms.

In a statement, the union said it plans to begin a protest at KEB's headquarters on Wednesday and pledged "not to hold any sort of negotiations." (Yonhap)