Banks Thumb Noses at Boss

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Banks Thumb Noses at Boss

Woori Finance Holdings Co., a government-led bank holding company, has met strong resistance from its subsidiaries Kyongnam Bank and Kwangju Bank over signing restructuring agreements.

The holding company signed an agreement early this week with the state-run Korea Deposit Insurance Corp. on a management improvement plan. Woori is now trying to sign similar pacts with its subsidiaries to define their responsibilities and duties.

Refusing to sign the accords, the two banks argue that they can survive independently without being absorbed by the holding company.

They say that Woori should respect the government-labor agreement made last December, in which Seoul promised to guarantee the independence of ailing banks until June 2002. They also say that Woori has no legal grounds to force its subsidiaries to sign restructuring plans.

Woori planned to meet with employees of the two banks this week but had to cancel the sessions when the workers resisted the idea.

"Woori Finance should exercise its rights as a major shareholder," said an official at Kyongnam Bank's branch office in Seoul. "It should not intervene in the management of its subsidiaries."

The official said Kyongnam should remain independent until next June, pointing out that the bank had 42.2 billion won ($32.6 million) of profits in the first half and expects to post 80 billion won of net income this year.

But a senior researcher at the Korea Institute of Finance, Lee Dong-gul, said, "Some of Woori's subsidiaries saw black ink in the first half, but that was thanks to their bailout by the government." He argued that those banks should cut costs through restructuring.



by Suh Kyoung-ho

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