Store and Workforce Reduction Due to Shift to Non-Face-to-Face
Improved Voluntary Retirement Conditions and Scope Compared to Previous Years
The headquarters of Citibank Korea, which announced the official withdrawal from the retail banking sector. Photo by Jinhyung Kang aymsdream@
[Asia Economy Reporter Kwangho Lee] This year, the number of employees leaving banks through voluntary retirement is expected to reach an all-time high. This is the result of a combination of factors including the withdrawal of retail banking by Korea Citibank, branch and workforce reductions due to the shift to non-face-to-face banking, and improved voluntary retirement conditions compared to previous years.
According to the banking sector on the 7th, SC Jeil Bank received voluntary retirement applications from the 8th to the 15th of last month, resulting in about 500 employees voluntarily leaving the bank. This is the highest number of voluntary retirements in six years since 2015, when 962 employees retired, compared to 154 in 2019 and 29 last year.
SC Jeil Bank has conducted voluntary retirement once a year targeting employees who are subject to the wage peak system, those nearing retirement, or those considering career changes, whenever it deemed workforce adjustment necessary.
Citibank has also been accepting voluntary retirement applications since the 28th of last month, not only from retail banking but also from corporate banking staff. The application period is scheduled to continue for two weeks until the 10th of this month. Within the banking sector, it is predicted that at least half of the approximately 3,400 Citibank employees, mainly from retail banking, will apply for voluntary retirement. This expectation is based on the fact that the voluntary retirement conditions agreed upon by Citibank’s labor and management at the end of last month are considered favorable, leading to a significant number of employees opting for voluntary retirement.
The agreed conditions state that regular employees and indefinite-term dedicated staff with a minimum of 3 years of service who apply for voluntary retirement can receive a special retirement allowance equal to 100% of their basic salary for the remaining months until retirement (up to 7 years), capped at 700 million KRW. Additionally, retirees will receive an extra 25 million KRW as start-up or career transition support funds.
Other commercial banks are also experiencing an increase in voluntary retirements.
KB Kookmin Bank had 800 voluntary retirements as of January 30. This number is several hundred more than 462 in 2020 and 613 in 2019, and nearly double the 407 in 2018. Shinhan Bank unusually conducted voluntary retirement twice this year, in January and July, with 220 and 130 employees respectively, totaling 350. Woori Bank also saw 468 employees leave through voluntary retirement at the end of January.
A representative from a commercial bank said, "More than 2,000 employees have left this year from commercial and foreign banks, and with the start of voluntary retirement applications at Citibank and some banks at the end of the year, the scale will surpass last year’s. The rapid increase in employees leaving banks is due to improved retirement conditions compared to the past and an expanded range of eligible employees," he observed.
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