The head of Korea Exchange Bank (KEB) raised the need to begin early merger talks with its parent group, Hana Financial, lending support to the group chief executive's remarks that hinted at an integration of the banking affiliates before the agreed-upon 2017 deadline, KEB said Tuesday.

In a July 7 written message to bank employees, KEB chief executive Kim Han-jo said, "We are in a situation where early integration talks are inevitable as profitability weakens and the management environment worsens amid rapid paradigm changes and heightening competition in the banking industry," according to the bank's press release.

Kim, who has worked at KEB for more than 30 years, was also quoted as saying that "integration is not something for the future but an alternative to overcome the present crisis" and that he promises to hold talks with the bank's labor union.

South Korea's No. 3 banking group, Hana Financial, acquired KEB from U.S. buyout firm Lone Star Funds for 3.9 trillion won (US$3.9

billion) in early 2012 but had postponed the integration process between the banking units amid strong protests from KEB's union.

Hana Financial and the KEB union agreed on post-takeover terms, under which the former will run KEB as an independent entity and maintain its current brand and wage system until at least 2017.

Kim's message comes just a few days after Hana Financial's chief executive told reporters that the time has come to start discussing the integration of the group's flagship Hana Bank and KEB.

The remarks by the two chief executives come as lenders in South Korea suffer from lagging profitability amid low interest rates and toughening competition.

Hana Financial saw its earnings drop 37.1 percent on-year in 2013 as squeezed interest margin weighed in. (Yonhap)