SC First Bank and its labor union, staging the longest walkout in the industry, are increasingly under pressure to strike a deal to end the dispute after the fight resulted in its lowered credit rating and intense scrutiny from the regulator.
About half of its 6,500 workforce has been on strike since June 27 to protest against the proposed introduction of a performance-based pay system. The bank was forced to temporarily close 42 of its 399 branches.
Tensions escalated Wednesday after management filed a complaint against its labor union leader Kim Jae-yool for allegedly damaging the bank’s image by distributing leaflets about the bank’s alleged wrongdoings. Analysts have expressed a grim view of the bank regaining its reputation.
“Even if management reaches a deal with its labor union the bank has exposed its discord with its big boss in London, which in this case has caused a huge inconveniences for consumers,” a banking analyst said.
Moody’s on Monday assigned a negative credit outlook on Standard Chartered’s Korean banking arm, citing the damage the dispute will cause as it shows no signs of ending. The Korean Financial Industry has said that workers will continue to fight until management agrees not to adopt the performance-based pay system.
“To be sure, the strike … has so far not had much of a negative impact on SCFBK’s financials, and the bank maintains a good liquidity position. However, Moody’s notes that it is uncertain when the strike will end,” said Moody’s senior analyst Choi Young-gil on Wednesday.
The Financial Supervisory Services on Monday sent a letter to the bank, urging it to come up with measures to manage its liquidity at appropriate levels as the bank continues to see deposit withdrawals from customers unhappy with the inconvenience caused.
The bank on Monday stopped charging transaction fees to prevent its customers from switching to their rivals.
A spokeswoman at the bank said Richard Hill, the CEO, has been negotiating with heads of its labor union for three consecutive days this week.
“The workers are demanding that the pay increase for this year be settled first. We don’t know when we will reach a deal, but management is still in talks with them to change the pay system,” a bank official said.
If the system is introduced, SC First Bank will become the first bank in the country to abandon a seniority-based pay scheme for competitive salaries.