Major banks are poised to pay large-scale performance bonuses to employees, despite the difficult situation in the wider economy.
The banking sector posted record-high earnings in 2011, while many households and small- and mid-sized enterprises are saddled with snowballing debts.
As a year-end compensation for the performance, four major commercial banks ― KB, Woori, Shinhan and Hana ― have offered or plan to offer workers extra payments.
Kookmin Bank provided employees with a bonus, which is equivalent to 150 percent of their monthly salary, at the end of December.
Hana Bank workers have also been offered a performance bonus, equivalent to 100 percent of their monthly salary.
Shinhan Bank is considering offering the bonus, which will be 200 to 300 percent of workers’ monthly wages, in the coming weeks.
Woori Bank is also set to join the move, though the amounts have yet to be decided.
For the payments, Shinhan and Woori have been in talks with the labor union and the state-run Korea Deposit Insurance Corp., respectively.
Buoyed by the banks’ remarkable performance, their parent financial groups are estimated to see their combined net profits in 2011 reach all-time high of about 10 trillion won ($8.77 billion).
The banking industry argues the bonuses are reasonable compensation for the huge earnings.
But bankers face criticism as most commercial banks were only able to survive or expand thanks to bailout funds from taxpayers’ money since the 1997 Asian financial crisis.
Shinhan Financial Group has secured the top position in the credit card business as it acquired public fund-injected LG Card, formerly the largest credit card company.
Shinhan Bank also took over Chohung Bank, which was rescued by taxpayers’ money.
The government has yet to retrieve public funds totaling about 10 trillion won that were injected to Woori Financial Group.
KB and Hana also could achieve remarkable growth by taking over financial companies, rescued by policymakers and the public.
Government officials including Financial Services Commission chairman Kim Seok-dong had already delivered strong criticism to the financial community.
The FSC chairman called for the industry to abandon the excessive pay schemes.
“I am not opposed to just performance and compensation,” he said. “But Korea’s financial companies could be alive because we infused them with some 160 trillion won in taxpayers’ money.”
He also said the financial sector needs to give its own answer as to the senior executives’ salary system.
By Kim Yon-se (firstname.lastname@example.org