With a high court ruling imminent on the long-debated ownership of Korea Exchange Bank (KEB), unionized workers voiced their intent to hold massive protests against the lender's potential acquisition by Hana Financial Group, a spokesman said Thursday.
In July, Hana Financial Group, South Korea's No. 4 banking group, agreed with U.S. buyout fund Lone Star to extend a deal to buy a 51.02 percent stake in KEB until November at a lower price of 4.41 trillion won (US$3.72 billion).
The Financial Services Commission (FSC) had been holding off on regulatory approval, however, saying it would deliberate on Lone Star's eligibility as a bank owner after a court ruling set for Thursday.
"We plan to stage massive rallies down the road, snapping a two-month hiatus," said Kim Bo-heon, a union spokesman. "But when and where to hold protests will be determined after reviewing the court ruling and the financial watchdog's stance over Lone Star's KEB sale." KEB has around 5,000 unionized members.
Unionized workers had been protesting against Hana Group's potential purchase of KEB for about 10 months until late July, apparently out of fear that it could lead to massive layoffs.
The Seoul High Court is scheduled to hand down a final ruling later Thursday whether a former head of Lone Star's Korean unit was guilty of manipulating stock prices related to the merger with KEB's credit card unit in 2003.
In March, the Supreme Court struck down a lower court verdict that convicted Yoo Hoe-won of issuing a false capital reduction plan designed to buy KEB's card unit at a cheaper price. It sent the case back to the high court at that time to be reconsidered. Lone Star purchased KEB in 2003.
The FSC, the financial watchdog, has delayed its deliberation of Lone Star's eligibility to be KEB's largest shareholder in a bid to review the court decision.
Lone Star's attempt to sell KEB has long been a hot issue in the local banking sector. Lone Star's receipt of massive dividends has drawn strong public criticism that the fund is trying to exit from the Korean market after fattening its pockets.
Foreign investors are also closely watching whether the FSC will approve the KEB sale as an indicator of the Korean government's stance on foreign capital. Lone Star's attempts to sell KEB have been thwarted three times due to FSC delays in granting regulatory approval.
If Yoo is convicted, the FSC can order Lone Star to offload 41 percent of its controlling 51 percent stake in KEB as Korean law does not allow a lawbreaking executive or corporate entity to be the primary shareholder in a local bank.
Speculation has risen that Hana Financial Group will eventually be allowed to buy KEB, but the labor union and civic groups argue that the FSC should issue a sale order to Lone Star with conditions attached to prevent the U.S. buyout fund from raking in excessive profits from the KEB sale.
"The proposed rally is designed to call for the FSC to rigorously review the case by taking into account Lone Star's illegality," said Kim, the union spokesman.
Lone Star has made profits of around 2.9 trillion won in yearly and quarterly dividends and the sale of part of its controlling stake in 2007, more than recouping its original 2.15 trillion won investment in the KEB takeover in 2003.