Citibank Starts Negotiations on 'Sale and Voluntary Retirement'... What Are the Scenarios for Each Plan?

Citibank Labor and Management Begin Discussions on Voluntary Retirement Plan Last Week
Union: "Need to Know Sale Method to Decide on Voluntary Retirement"
Partial Sale and Gradual Phase-Out Likely to Prolong Situation
Unlikely to Complete Retail Banking Withdrawal Within This Year

[Asia Economy Reporter Song Seung-seop] The labor and management of Citibank Korea have entered full-scale negotiations over the domestic consumer finance withdrawal strategy and voluntary retirement plans. It is expected that the union's acceptance of voluntary retirement will be determined according to the sale scenario, and there are observations that it has become impossible to complete the process within the year as initially planned by the management.

According to the financial sector on the 12th, Citibank set up a negotiation table last week to discuss the conditions for voluntary retirement between labor and management. Since the meeting was largely a courtesy introduction between labor and management officials, detailed condition adjustment negotiations are expected to continue from this week.

Previously, Citibank proposed a voluntary retirement plan that separately pays a special retirement allowance compensating 90% of the remaining annual salary until retirement, up to a maximum of 700 million KRW. This was based on the judgment that downsizing before the sale was necessary due to the large number of high-salary personnel.

Within the industry, there is growing speculation that the method of selling Citibank will be decided or disclosed during the voluntary retirement negotiation process. The union demanded to know the sale method from management in order to discuss voluntary retirement. A Citibank union official explained, "In the case of the sales department, the company must know where it is being sold to decide on voluntary retirement," and added, "Even departments not being sold need to know what roles they will play in future internal reallocations."

Accordingly, it is expected that the schedule for voluntary retirement and exit strategies will vary depending on the sale method proposed by Citibank. The fastest scenario is for management to successfully carry out a full sale of retail finance as demanded by the union and some political circles. Since management’s voluntary retirement proposal is considered ‘radical’ and opinions among employees are generally favorable, if a sudden agreement is reached, the sale process could accelerate significantly.

Voluntary Retirement Tied to Sale... Sale Within the Year Practically Impossible

The situation becomes complicated starting with the partial sale process. Financial companies that have expressed interest in acquisition have shown reluctance to inherit the employment of all employees due to labor cost burdens, making a full sale plan practically unfeasible. The market also evaluates that partial sales, such as splitting off profitable business units like Wealth Management (WM) or credit cards, are the most realistic sale methods. Furthermore, since the union has shown a principled stance against accepting partial sales, negotiations are bound to be prolonged.

If most departments undergo phased closures or if the sale negotiations fail, leading to the liquidation of the entire retail finance division, the risk of strong union opposition and large-scale strikes increases. The Citibank union already obtained strike rights in June through a vote with 93.2% of union members agreeing. If labor and management escalate to a hardline confrontation, customers will suffer inconvenience and damage, and a large-scale unemployment crisis will ensue.

As the presidential election approaches, there is also a sensed concern about unexpected variables originating from the political sphere. With the Democratic Party and the People Power Party presidential candidates beginning full-scale campaigns, they may raise voices on labor issues related to financial company sales. In fact, in June, six lawmakers from the Democratic Party’s Labor Respect Practice Group visited Citibank to request measures for customer protection and employment stability.

However, the industry consensus is that a sale within the year has become impossible regardless of the scenario. Past Citibank voluntary retirement negotiations have taken about a month on average. Now, with the sale issue intertwined, it will inevitably take longer. Even if workforce restructuring is completed quickly, a preferred bidder must be selected and approval from the Financial Services Commission must be obtained.

The financial authorities are also maintaining a cautious stance regarding the sale of Citibank. On the 6th, at the National Assembly’s Finance and Economy Committee audit, Financial Services Commission Chairman Ko Seung-beom responded to the question, "Is the partial sale of Citibank subject to FSC approval?" by saying, "We will review it later after the sale method is decided."

This content was produced with the assistance of AI translation services.