Banks shell out W6.5 trillion in early retirement compensation since 2019

A passer-by enters one of the ATM booths operated by major commercial banks in Seoul, Oct. 1. Yonhap By Yi Whan-woo Commercial banks in Korea spent more than 6.

5 trillion won ($4.83 billion) on their employees who have voluntarily quit since 2019 in line with the banking industry’s efforts to cut costs in the digital era, data showed Wednesday. The finding fuels public discontent toward the lenders, who are perceived to be enjoying "windfall profits" due to high borrowing rates.



The data, compiled by the Financial Supervisory Service and released by Rep. Cheon Jun-ho of the main opposition Democratic Party of Korea (DPK), showed 14 commercial banks spent 6.54 trillion won on their voluntary retirement programs from 2019 to August this year.

Over the cited period, a total of 16,236 employees left the 14 companies, although they have not reached retirement age. In return, each corresponding individual received an average of 402.94 million won as early retirement compensation, which the lenders found to be a more efficient way to reduce expenses than retaining them until retirement.

Such a cost-saving strategy has been increasingly adopted in the banking industry, as banks are shutting down branch offices to cope with accelerated digitalization. “The amount spent on early retirement pay, however, can be discouraging for many ordinary citizens,” Cheon said. He referred to self-employed individuals and small business owners who were stricken by the COVID-19 pandemic and took out loans from banks to sustain business.

The high interest rate and high cost of living have weighed on these borrowers. On the other hand, the banks have been reaping massive profits driven by high interest income. By companies, Citibank Korea topped the list of early retirement pay.

It paid 1.27 trillion won to a total of 2,130 employees, compared to KB Kookmin Bank’s spending worth 1.24 trillion won to 3,323 individuals and Shinhan Bank’s 672.

7 billion won to 1,954 early retirees. Hana Bank paid 851.8 billion to 2,454 employees, while Woori Bank gave out 807.

8 billion won to 1,940 employees..