Hana Financial Group and the Korea Exchange Bank labor union reached an agreement on the Hana Bank-KEB merger deal Monday, heralding the launch of Korea’s largest lender by assets.

The banking group said it would complete the merger process by Sept. 1, as the last hurdle was now cleared.

Hana Financial has pushed for the merger since its acquisition of KEB from U.S. buyout fund Lone Star in 2012. But the group had failed to make progress in launching a merged mega bank due to opposition from the KEB labor union, which called for independent management for five years.

 “Both sides came to a common understanding that the merger is a forward-thinking move to overcome the unfavorable financial environment and KEB’s managerial difficulties,” a Hana Financial Group spokesperson said after a signing ceremony for the agreement.

Hana Financial Group chairman Kim Jung-tai, KEB labor union chief Kim Keun-yong, Hana Bank labor union chief Kim Chang-geun and the chief executives of KEB and Hana Bank attended the ceremony.

The agreement states that the related parties would drop all ongoing and future legal cases regarding the Hana Bank-KEB merger deal. According to the agreement, the integrated bank will launch no later than Oct. 1, with 290 trillion won ($257 billion) in assets, 945 branches and 15,717 employees.

In the first two years of the merger, the integrated bank will operate two-track personnel policies, based on their banks of origin. The cross-appointment, or relocating officials from one bank to the other, will be made based on individual negotiations.

The agreement also promises job security for KEB employees and bans any restructuring without solid grounds. The bank officials are guaranteed fair treatment, free from any discriminative disadvantage based on their place of birth, region of residence and academic career.

The employees’ wages and welfare will not be lower than the present conditions and future pay raise negotiations will be made in respect to the conventions of the Korea Workers’ Compensation and Welfare Service at minimum.

In addition, the integrated bank will launch with a company name that contains “KEB.”

Shortly after the merger deal was signed, Hana Financial Group filed for the regulator’s preliminary approval on the merger.

The Financial Services Commission, the country’s highest financial decision-maker, said the assessment would be made “according to due administrative procedures.”

“Regarding the Hana Bank-KEB merger, we received reports the agreement resulted from sincere communication and negotiation,” the FSC said in a press release.

“We positively regard the agreement, as the government has univocally emphasized the significance of mutual agreement between the union and the management,” the regulator added.

After the regulator confirms the preliminary approval of the merger, Hana Financial Group still needs approval from the board of directors and plenary approval from the regulator before the new banks’ launch.

By Chung Joo-won (joowonc@heraldcorp.com)