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Analysts said bank officials can make a good case that pain-sharing since the outbreak of the crisis was by no means equitable. But this does not justify their general strike plan which holds the national economy hostage, they argue.

"The weak banks that received public funds for recapitalization are still on shaky ground. They need to improve efficiency in one way or another," an analyst said.

He blamed the government for its failure to talk seriously with bank officials about ways to make banks healthier. A KFBU official said the government blocked the union's attendance in a public hearing held to discuss the proposed introduction of the financial holding company system.

The KFBU suspects that the motivation behind the government's holding company plan is to sell off its bank stakes to foreign investors. "Once integrated under a holding company system, the prices of bank stocks will rise, making it easier for the government to sell its stakes to foreign investors," a federation official said.

Some analysts, however, believe that the KFBU is using this rhetoric simply to rally all domestic banks behind it. "Healthier banks are not in the same position as that of weaker ones. To build a common front, the federation needs to emphasize the suspected sale of domestic banks to foreign investors," an analyst said.

Bad timing Watchers also criticized the government for promoting its bank integration plan too hastily. Earlier this year, Finance and Economy Minister Lee Hun-jai said there wouldn't be bank mergers this year. But other government officials, including Financial Supervisory Commission Chairman Lee Yong-kun, urged bank presidents to take the initiative toward mergers. The debate tilted toward early restructuring, forcing Lee to change his own timetable for bank restructuring.

Calls for early restructuring of the banking and corporate sectors appears to have great support. A recent poll of 100 CEOs, academics and economists conducted by a daily newspaper found a majority of the experts favor prompt restructuring, using public funds if necessary.

Attributing the recent financial instability to the delay of financial and corporate reforms, they stressed that restructuring needs to be completed soon in order to cope with various financial transactions connected with inter-Korean economic exchanges in the days to come.

But a group of experts, including the finance minister, say that early restructuring has its own costs, as vividly shown by the bank unionists' move. Facing the strike threat, Lee returned to his original stance. "Mergers among large banks will not likely come to pass within this year," Lee said at a government-ruling party meeting Monday morning.

"Lee's comment doesn't differ much from his original views expressed before the general election on April 13," a finance ministry official said, adding, however, that Lee is not implying that efforts to group weak banks under financial holding companies will not continue.

Before the general elections, Lee planned to promote the enactment of the financial holding company system in the third quarter of the year. But he was forced to advance the legislation schedule.

Lee's idea was that toward the end of the year, weak banks will voluntarily move towards mergers under the market pressure. The mechanism that will activate this pressure is the change in the deposit insurance system from full universal insurance to partial insurance, which will encourage depositors to migrate from weak banks to healthier ones.