Citibank's Korea Troubles Continue
Image Credit: flickr/ InSapphoWeTrust

Citibank's Korea Troubles Continue


With a Seoul District Court rejecting a petition filed by the union of Citibank Korea for an injunction on voluntary resignation, the long-lasting conflict between the union and Citibank Korea is likely to continue.

The union asked the Seoul Central District Court in April to invalidate Citibank Korea’s early retirement program, insisting that it is tantamount to forced dismissal and arguing that it did not follow proper procedures. The union also argued that the bank management unilaterally introduced the program without discussing it with the union.

However, the court dismissed the union’s request last week, saying Citibank Korea’s early retirement scheme does not constitute a forced layoff as both the company and employees agree to the terms of terminating the latter’s contract.

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”Voluntary retirement is a legally binding pact designed to end the workers’ contract based on a consensus between the company and employees,” the court said. ”Thus, we cannot say Citibank’s scheme amounts to forced dismissal as claimed by the union.”

As of June 13, 15 percent of employees had applied for early retirement, according to Citibank Korea.

The conflict between the union and Citibank Korea has shown no signs of abating, raising concerns among some that the conflict might imperil South Korea’s goal of becoming the regional financial hub of Northeast Asia.

The union of Citibank Korea has been protesting since Citibank Korea announced in April that it will gradually close or combine 56 branches out of 191 across Korea.

“According to Citibank Korea’s plan, 30 percent of branches will be closed or combined, which makes employees feel insecure about their jobs,” said Kim Moon-ho, a chairman of Korean Financial Industry Union.

“Since Citibank Korea’s decision was not discussed with the union at all, it’s a violation of the labor law,” he added.

In fact, Citibank Korea has already downsized its employees and branches in recent years in an effort to reverse falling profitability.

Citibank Korea reported a net profit of 219 billion won (US$208 million) last year, down 8.1 percent from a year earlier, mainly due to a fall in revenue from interest and increased loan-loss reserves.

However, the union argues that Citibank is exaggerating the situation in order to hide its poor management and has been urging Citibank Korea to revise or withdraw its downsizing plan.

“Citibank Korea has spent about 1.2 trillion won for ‘service charge’ over the past 10 years, and as of 2013, it spent about 180 billon won as the ‘service charge, which was 85 percent of last year’s profit, ” the union said in an April 28  press release.

The union has raised concerns that Citibank Korea created the system to move money from Korea to its U.S. headquarters without any regulation. It has also threatened to go on strike.

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