s.korea regulator says koram strike threatens chao UPDATE...

s.korea regulator says koram strike threatens chao UPDATE 1-S.Korea regulator says KorAm strike threatens chaos
July 6, 2004 4:36am ET (Reuters)

(Adds labour minister, union moves, updates deposit tally, shares)

By Jean Yoon

SEOUL, July 6 (Reuters) - South Korea's financial regulator urged on Tuesday unionised workers at KorAm Bank, who have been on strike for nearly two weeks, to reach an agreement with management soon to avoid potential chaos in the financial system.

Underscoring signs that authorities may be losing patience, Labour Minister Kim Dae-hwan also said the government would target those responsible for disrupting operations at the bank during the strike.

The 2,400-unionised workers at KorAm , recently bought by Citigroup Inc , have demanded job security and opposed plans to delist the country's sixth largest bank before integrating it with Citigroup's local branches.

The walkout, the first in KorAm's 21-year history, has disrupted operations at most of the bank's branch offices and has led to the banking industry union considering wider action.

Foreign investors cite labour strife as a key hurdle to doing business in South Korea and part of the reason for the relatively low value of local shares, known as the "Korea Discount". "We strongly urge the union and the management to come to an agreement as soon as possible," Lee Jung-jae, Chairman of the Financial Supervisory Commission, said in a statement.

"If the talks are not resolved amicably and the strike continues, we cannot leave the matter because it could bring chaos to the financial market, as well as losses for the bank," he said.

Deposits at KorAm had tumbled 7.5 percent, or 2.31 trillion won ($2 billion), by July 5 since the strike began in late June, the bank said.

"The government will hold accountable those involved in illegal activities and the KorAm Bank strike is not an exception," the labour minister told reporters.

In response, KorAm's labour union said it has decided to move its sit-in protest to a labour training centre on the outskirts of Seoul from the bank's headquarters in central Seoul to prevent being forcibly removed by police.

The Korea Financial Industry Union, an umbrella group for labour unions at 38 banks and financial institutions including KorAm, said on Monday its member unions would vote on July 13 over plans to launch strikes to support KorAm union.

Finance Minister Lee Hun-jai recently warned that the government could intervene in the dispute if necessary, while the central bank also said last last month it had set up a task force to smooth payments and settlements of commercial bills and said it would lend to KorAm if the bank needed money.

Over the weekend, police issued arrest warrants for five union officials who were leading the strike at KorAm, triggering anger from union members.

Shares in KorAm ended unchanged at 15,500 won, lagging the broader market up 0.23 percent.