The labor union of Korea Exchange Bank sought an injunction to block financial regulators’ endorsement of Hana Financial Group’s takeover of KEB.

“We (and a group of KEB’s small investors) filed for the injunction with the Constitutional Court late Jan. 31,” a KEB union leader said on Wednesday.

The unionized workers’ move comes four days after the Financial Services Commission approved Hana Financial’s application to acquire the bank from U.S.-based Lone Star Funds last Friday.

The FSC has been negligent in probing eligibility of Lone Star as the biggest shareholder of KEB over the past few years, the union said.

The workers continued to argue that the equity fund has been ineligible to control the bank, alleging that it was a non-financial investor.

Accordingly, the takeover deal between Hana and Lone Star was invalid from the start, according to them.

In a similar vein, the union filed an injunction with Seoul Central Court in early January to block Lone Star’s plan to sell its controlling stake in the bank to Hana Financial.

In its filing with the court, the unionized workers called for KEB executives named by Lone Star, including outgoing bank CEO Larry Klane, to suspend the scheduled share selling.

Lone Star signed a contract with Hana Financial in November 2010 in an attempt to dispose of its KEB shares before the financial watchdog announces the result of its probe into whether the fund was eligible to become the majority shareholder of the bank in 2003, the union said.

They also said Hana Financial has weaknesses in competitiveness and financial structure.

“So the sale is aimed at only benefits of the majority shareholder (Lone Star) by undermining corporate value of KEB.”

Meanwhile, an NGO led by Hansung University Prof. Kim Sang-jo requested that the prosecution investigate three former chairmen of the FSC for neglecting the probe concerning Lone Star’s eligibility as the biggest shareholder of a local financial company.

They are Chin Dong-soo, Jun Kwang-woo and Kim Yong-duk.

“They neglected their duties or abandoned them,” the Solidarity for Economic Reform said in its filing.

The unionized workers are discussing whether to stage a “general strike.”

By Kim Yon-se (kys@heraldcorp.com)