Major banks offer voluntary redundancies

As the end of the year approached, local commercial banks have started accepting voluntary retirement applications from employees.

In the past, voluntary retirement has been considered a bitter pill banks had to swallow during times of financial stress.

However, over the last few years, many banks here have started regularly accepting voluntary retirement applications mainly due to a digitalized environment which led to a decline in clients visiting its branches.

Despite record earnings from high interest rates this year, top banks are offering early retirement packages to their employees.

KB Kookmin Bank began accepting applications for voluntary retirement on Wednesday.

Along with announcing that it will accept applications from employees that are born between 1967 to 1972 (50-55 years old), the bank also laid out details about the retirement package, which were agreed upon by the bank's labor union and management.

As a special severance pay, KB Kookmin Bank is offering 23 to 35 months of average monthly salary. The period depends on how long the employee has worked for the bank.

KB Kookmin Bank also will support employees that are planning to go back to school by providing 3.5 million won ($2,700) per semester, for up to eight semesters.

To support employees in furthering their careers post-retirement, each worker is eligible for up to 34 million won in subsidies when finding new jobs. They can also choose to continue working for the bank as contract workers a year after leaving the company.

Health checkups for employees who opt for the retirement scheme, and their spouses, are included in the package as well.

KB Kookmin Bank will accept applications until Monday.

Another top lender, Woori Bank, also accepted voluntary retirement applications from Dec. 19 to 27. Employees in their 40s who were born before 1980 could also apply this year.

Along with the bank's special severance pay, Woori Bank will also pay for the school expenses of the employees’ children. Up to 28 million won is provided per child.

Those looking for new jobs can also receive up to 23 million won.

Health checkups and a travel voucher worth 3 million won are also included in Woori Bank’s voluntary retirement package.

With KB Kookmin Bank and Woori Bank starting their voluntary retirement process, industry insiders expect the two other big local commercial banks of the top four -- Hana Bank and Shinhan Bank -- will likely soon follow suit.

The top four banks are expected to complete the layoff process by the end of January next year.

Back in January 2022, 674 employees from KB Kookmin Bank, 250 from Shinhan Bank, 478 from Hana Bank and 415 from Woori Bank left through the voluntary retirement schemes. The total number of voluntarily retired employees came to 1,817.

Since Woori Bank is accepting applications from employees in their 40s, as it did in January this year, some industry insiders said it could bring the total early retirements to more than 2,000 in the coming month.