Kookmin Bank pushes for aggressive downsizing

Kookmin Bank is accelerating its major manpower restructuring, transferring 219 underperforming employees to an extra department designed for retraining.

A certain portion of them will likely face dismissal or be pressured to quit if they fail to reach a certain level of performance within about two years, an official of the nation’s largest bank said Tuesday.

The employees at the department are obliged to take on lessons for six months. Those who will show improvement and potential will be entitled to be replaced at regular departments.

Since the bank conducted a restructuring last November that led the bank to lay off more than 3,200 of its approximately 26,000 employees, its moves to increase productivity have continued.

Kookmin’s senior officials, including CEO Min Byong-deok, have stressed that productivity has been lowered due to widespread inefficiency in the overall sector and management indices have continued to worsen.

They said the bank has reached a critical situation under which it cannot provide foreign investors with confidence about the bank’s future.

Min said in November that the nation’s No. 1 bank may be demoted to the second bracket if it settles for the status quo.

“We are standing at a significant crossroads, whether to make a new leap forward or to become a second-class bank,” Min said in his speech to commemorate the ninth anniversary of the bank’s foundation.

It is undeniable that Kookmin failed to cope with the rapidly changing situation over the past 10 years, he said.

The bank’s parent company KB Financial Group is expediting efforts to reshape its credit card unit, which will be spun off from Kookmin Bank in the first quarter.

The separation is a key enterprise of group chairman Euh Yoon-dae to improve the profitability of the struggling banking titan. KB Card is likely to be launched as early as March after a regulatory endorsement.

The financial group had planned to move about 1,300 employees to KB Card.

A group spokesman said the number of applicants for movement was 1,670, far more than earlier expected. They include 1,200 full-time and 470 contract workers.

By Kim Yon-se (kys@heraldcorp.com)