NH Nonghyup Bank Accepts Voluntary Retirement Applications from 26th to 30th
SC First Bank Offers Up to 38 Months' Salary for Voluntary Retirement Applicants
Daegu Bank Adds 10 More, Total 41 Voluntary Retirement Applications
[Asia Economy Reporter Park Sun-mi] Amid the shock to all industries caused by the novel coronavirus infection (COVID-19), banks, which were relatively less affected, have begun full-scale downsizing efforts. Although bank profits surged due to the craze for 'Yeongkkeul' (pulling together all resources) and 'Bittu' (investing with borrowed money) and ultra-low interest rates, they believe that workforce restructuring is inevitable due to the reduction of offline branches following the expansion of non-face-to-face services and digital transformation (DT) of operations.
According to the banking sector on the 30th, NH Nonghyup Bank accepted applications for voluntary retirement from the 26th until today. The eligible employees are those subject to the wage peak system aged 56 and over, and general employees aged 40 and over with more than 10 years of service. Last year, Nonghyup Bank had 370 applicants for voluntary retirement, but this year, the number is likely to increase as the special retirement pay conditions are better than last year.
Other commercial banks such as KB Kookmin Bank, Shinhan Bank, and Woori Bank will also accept applications for voluntary or desired retirement by next month or January next year. They plan to announce related retirement application notices soon after labor-management consultations.
Retirement applications are no exception for foreign and regional banks.
SC First Bank, among foreign banks, is the first to accept retirement applications. Since the 26th, SC First Bank has started accepting applications from employees aged 55 and over and plans to pay up to 38 months’ salary to applicants. DGB Daegu Bank recently accepted additional voluntary retirement applications from 10 employees aged 56. Along with the 31 who applied in July, they plan to process the retirement of 41 employees by the end of the year.
Is the downsizing wave in the banking sector starting in earnest?
The number of voluntary and desired retirement applicants in the banking sector this year is likely to increase compared to previous years.
Among the five major commercial banks, Nonghyup Bank, which first accepted voluntary retirement applications, significantly raised the special retirement pay amount compared to last year. Employees subject to the wage peak system aged 56 receive 28 months’ worth of average monthly salary at retirement, 40 million KRW in job transition support, and 10 million KRW in agricultural product gift certificates. General employees born from 1980 can apply for voluntary retirement, and those born between 1967 and 1972 can receive 39 months’ worth of average monthly salary and 10 million KRW in agricultural product gift certificates.
This is a significant improvement compared to last year when general employees only received 20 months’ worth of average monthly salary at retirement. Nonghyup Bank received 538 voluntary retirement applications in 2017, 597 in 2018, but the number dropped to 370 in 2019. Therefore, the substantial increase in special retirement pay this year is likely to lead to a more balanced number of retirement applications across all age groups.
An official from a bank said, "The conditions for voluntary and desired retirement will be set differently depending on each bank’s internal situation, but the increase in retirement pay compared to previous years reflects the intention to actively accept retirement applications. Banks with reduced net profits this year may not be able to significantly increase retirees due to cost issues, but those in a position to do so will soon proceed with related labor-management agreements reflecting the current business environment."
As warnings arise that banks’ asset soundness will deteriorate and credit ratings will be negative next year, machines are replacing simple tasks, and branches with eliminated staff are either newly established or existing branches are being consolidated. Accordingly, the number of bank branches where employees can be assigned continues to decline.
The number of domestic bank branches (including branches and sub-branches) dropped from 7,281 in 2015 to 6,592 by the end of the first half of this year. The number of new hires in the domestic banking sector this year decreased by about 30% compared to last year.
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