The showcase of Korea's corporate restructuring efforts to date has been the closure of five small regional banks and the assumption of their assets by five better medium-size banks.
The Financial Services Commission ordered KorAm Bank to take over Kyungki Bank, Housing & Commercial Bank to absorb Dong Nam Bank, Hana Bank to acquire Chungchong Bank, Kookmin Bank to take on Daedong Bank and Shinhan Bank to acquire Donghwa Bank.
The FSC's first problem was that the plans leaked; disgruntled staff then crashed bank computers as a protest against likely job losses.
To the FSC's critics, the poor handling of the closures highlighted its inability to resist lobbying and the presence of destabilizing elements in its supposedly hand-picked ranks.
Lee Hun-jai, the commission's chairman, takes full responsibility for the handling of the merger. "My staff recommended a total suspension for two to three days," he says. "I decided that even though there would be some inconvenience it would be better to open the banks so we could provide services to depositors and clients. I still think I was right even though we suffered from the computer problems caused by staff sabotage.