Strike-hit SC First Bank asked to step up liquidity management

SEOUL, July 18 (Yonhap) -- South Korea's financial regulator ordered SC First Bank Monday to ramp up its liquidity management to minimize the impact of a bank run sparked by a prolonged strike.
The labor action at the South Korean unit of Standard Chartered Plc. entered its 22nd day on Monday, the longest work stoppage in local banking history. Unionists walked away from their jobs on June 27 to protest a management plan to adopt a performance-based salary system.
"Measures should be taken to prevent financial accidents and customer inconveniences. The management and union should settle the dispute as soon as possible," Financial Supervisory Service (FSS) Gov. Kwon Hyouk-se said in a staff meeting.
The watchdog's move comes as close to 1 trillion won (US$942 million) in deposits is estimated to have been withdrawn from the sixth-largest lender in the country since the start of the walkout.
"The instruction was issued since a prolonged strike could lead to a possible delay in withdrawals of deposits by customers," said an FSS official, adding that around 10 inspectors are conducting an on-site inspection to monitor the situation.
Meanwhile, SC First Bank said Monday it will deduct commissions on some bank services until the strike ends as part of its efforts to compensate for customer inconveniences.
SC First Bank is the first lender in South Korea to seek to introduce a performance-based pay system, sparking vehement opposition from its labor union, which claims the new pay scheme is merely aimed at reducing labor costs.
Out of 6,500 bank employees, half are union members and the labor union estimates that about 2,900 of them have been staging a rally at a resort in Sokcho, 213 kilometers east of Seoul.
Standard Chartered took over Korea First Bank for 3.4 trillion won in April 2005 and renamed it SC First Bank in September the same year. It was the largest ever takeover by the British banking giant.
mil@yna.co.kr