SC First Bank temporarily shutters 43 branches

SC First Bank, the South Korean unit of Standard Chartered Plc., said Monday it had temporarily shut down operations at 43 branches in a bid to minimize the impact of a prolonged labor strike. Unionized workers at SC First Bank launched an indefinite strike on June 27 in protest of the management's move to introduce a performance-based pay system, causing bank customers to face inconvenience in using financial services. "Until the labor strike comes to an end, the branches will remain closed in a bid to ease heavy workloads placed on bank employees who did not join the labor strike," the bank said in a statement. SC First Bank has 392 branches nationwide. The bank said even though operations will be halted at those branches, automatic teller machines will run as usual and customers will be able to use Internet or mobile banking services. SC First Bank is the first lender in South Korea seeking 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, of whom half are unionized workers, about 2,900 employees, according to labor union estimates, have been staging a rally in Sokcho, 213 kilometers east of Seoul. The labor strike comes as a major setback for the bank, which the state regulator penalized last week for its violations of local banking laws such as the illegal handling of metal loan services to corporate customers. The Financial Supervisory Service (FSS), the financial watchdog, said it is beefing up monitoring over the labor strike in a bid to prevent customers from facing inconveniences due to the temporary closure of the branches. The FSS said it has increased the number of inspectors, who have been dispatched to the bank's branches, to strengthen monitoring and is seeking to sternly hold the bank responsible if financial incidents occur or customers incur losses due to a prolonged labor strike. Standard Chartered acquired Korea First Bank for 3.4 trillion won (US$3.2 billion) in April 2005 and renamed it SC First Bank in September of the same year, the largest ever takeover by the British banking giant.