KEB labor union moves to block hefty dividend payout

(Yonhap) -- The labor union of Korea Exchange Bank (KEB) filed an injunction with a Seoul court on Tuesday in a bid to block the bank's recent decision to dole out hefty dividends.

On March 31, shareholders of KEB, including top shareholder Lone Star Funds, decided in a shareholders meeting to pay out a cash dividend of 850 won (US$0.78) per share for the fiscal 2010, paving the way for the U.S.-based private equity fund to rake in a large profit before selling KEB to Hana Financial Group Inc.

Hana Financial, South Korea's No. 4 banking group, made an agreement with Lone Star in November to take over the fund's 51.02 percent KEB stake and now awaits final approval from the financial regulator to consolidate KEB.

In a bid to block what the KEB labor union sees as excessive dividend payments, the union filed an injunction with Seoul Western District Court to stop the dividend plan.

"KEB will respond in accordance with legal processes under consultation with lawyers," KEB said in a regulatory filing.

With the shareholder decision, Lone Star stands to receive a total of 367 billion won in dividends for 2010, including 77.3 billion won in quarterly dividends that were already distributed.

Lone Star took control of KEB in 2003 in the aftermath of the 1997-98 Asian financial crisis.