Labor strife cools down for weekend at Korea's Chohung

Labor unrest at South Korea's troubled Chohung Bank went into a lull yesterday as the union and the buyer of the country's oldest bank resumed talks to head off a possible crisis.

The bank scrapped an earlier plan to shut down its computer center over the weekend after several union members returned to their desks.

"We didn't want the shutdown to happen so we cancelled the temporary decision at the request of the bank," said Lee Yong-Deuk, head of the Korea Financial Industry Union, which has Cho-hung's union under its wing.

The gesture came after the union and Shinhan Financial Group, the buyer of Chohung, held their second round of talks early Saturday.

Little progress was made in the 90 minute-talks but both sides said they were expecting further negotiations over the weekend.

Shinhan officials said Cho-hung's labor union put up conditions that it found impossible to accept.

The union, which had earlier demanded an end to the sale, called for an immediate merger between Shinhan and Chohung on equal terms and a promise of no lay-offs.

Shinhan plans to merge with Chohung over a period of two or three years once the bank has put its house in order.

A run on deposits also showed signs of easing, with some 800 billion won withdrawn on Friday, compared with 1.3 trillion won taken out the previous day.

Chohung has been undergoing a run on deposits since most of the bank's 7,000 staff walked out Wednesday in protest at the sale.

Scores of the bank's branches across the country have been shuttered and many others have been offering limited services. Foreign exchange and loan services were among those that have had to be suspended.

Japanese-invested Shinhan has agreed to pay 3.37 trillion won (US$2.8 billion) to take over the government's 80.04 percent stake in the bank.