[1mm Financial Talk] "Please pay with my salary money"... Shinhan Bank faces mixed opinions on mandatory employee stock purchase

Among the 4 Major Banks, Only Shinhan Is Required to Purchase Employee Stock with Part of Salary
Applicable Only to Shinhan Bank Among Its Affiliates
"Many Benefits of Employee Stock" VS "The Problem Is No Choice Given"

[Asia Economy Reporter Minwoo Lee] Shinhan Bank employees are expressing dissatisfaction with the mandatory purchase of employee stock ownership (ESOP) using a portion of their monthly salary. Although there are benefits such as income tax deductions for purchasing ESOP shares, many feel it is unreasonable that they are not even given a choice.

According to the financial industry on the 13th, Shinhan Bank employees are required to purchase about 6-10% of their monthly salary in ESOP shares of their parent company, Shinhan Financial Group. The parent company, Shinhan Financial Group, started the ESOP purchase system in the 2010s through labor-management agreements. In the early 2000s, the labor-management agreement involved a 'matching grant' system where employees contributed part of their salary along with bank support funds monthly into a pension trust product. However, after a court ruling that employee welfare pensions should be included in ordinary wages, the 2010 labor-management agreement changed the welfare pension system to a mandatory ESOP purchase system.

This has led to a flood of complaints among employees, especially those with fewer years of service. While all four major commercial banks operate ESOP purchase systems, only Shinhan Bank makes it mandatory. In contrast, KB Kookmin Bank, Hana Bank, and Woori Bank allow employees to choose whether to participate. Hana Bank allows employees to purchase ESOP shares from a minimum of 50,000 KRW up to 100% of their salary, and Woori Bank provides a monthly purchase support fund of 150,000 KRW if employees buy at least 100,000 KRW worth of shares monthly.

Some senior employees say the benefits of ESOP shares make the burden manageable. Deputy Manager B said, “ESOP shares allow income tax deductions up to 4 million KRW annually, and if deposited with a securities finance company, dividend income tax is exempted. Although the stock price does not rise significantly, it also does not fall, and dividends from financial stocks are considerable, so it does not seem like a big loss.”

However, the biggest source of dissatisfaction among employees is not the profit or loss but the lack of the right to choose. Especially, applying this system only to Shinhan Bank among its affiliates is seen as 'unfair.' Shinhan Bank employee A, with 10 years of service, said, “I was shocked to learn late that other major banks do not have mandatory ESOP purchases. It feels like reverse discrimination that only Shinhan Bank within the same group enforces this.” He added, “Every year when the company approaches the shareholders' meeting, they ask us to delegate voting rights, but even if we buy a lot of ESOP shares, we are less influential than shareholders holding just 1%.” As of the end of Q3 this year, Shinhan Financial Group’s ESOP shareholding ratio was 5.07%, ranking third after the National Pension Service (8.22%) and BlackRock (5.67%).

As these voices grow louder, the Shinhan Bank branch of the National Financial Industry Labor Union (Shinhan Bank Union) is reportedly planning to raise the mandatory ESOP purchase clause as an agenda item in the upcoming collective bargaining agreement. A Shinhan Bank official said, “If the issue persists, labor and management may discuss it again, but since ESOP shares can be sold after one year of purchase and there are various benefits, the complaints are not entirely one-sided.”

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