Global banking company Citigroup from U.S has announced to have reportedly spend around $1.5 billion, or 1.8 trillion won, on the withdrawal of its retail business in South Korea.
According to the Wall Street Journal, the group in a regulatory filing mentioned that its expenditure on severance pay for employees at the Korean subsidiary’s retail banking operations will range between $1.2 billion and $1.5 billion. And by the end of next year, it will pay the envisioned personnel costs in phases.
Such a decision was made by the company headquarters after its Korean unit last month announced that it would carry out a gradual phasing out of its consumer banking division instead of selling it to another financial institution. This was because of the foreign bank and potential bidders failed to agree on terms of the sale.
According to industry sources, the lender had offered to pay out a maximum of 700 million won in special severance pay to employees who have worked for at least three years. And since Oct. 28, it has been accepting requests for voluntary retirement. So far some 3,500 workers are subject for voluntary retirement, and nearly 60 percent had applied for the package.
The US banking giant, earlier in April had announced that it would pull out its consumer banking units several countries to cut down its consumer banking operations with a focus on business finance. The countries being Bahrain, China, India, Indonesia, Australia, South Korea, Malaysia, Philippines, Poland, Russia, Taiwan and Thailand.
According to reports, among the 13 overseas subsidiaries subject to the group’s divestiture plans, only the Australian unit has so far succeeded in selling off its retail banking operations.
The bank has reportedly been facing opposition from the union despite significant compensation offered to workers for partial business closure. The union has been urging the lender to seek for potential buyers to keep their jobs.
The head of the Citibank Korea labor union, Jin Chang-geun, commented that they can’t accept the bank’s move to lay off its employees unless more detailed measures to protect job security has come out.