Strikers are angry at the government sell-off plan

The employees at Chohung Bank, the fourth biggest in the country, walked out earlier this week in protest at the government's plans to sell up its 80% stake to Shinhan Financial Group.

But Shinhan has now promised to retain Chohung as a separate subsidiary for at least three years, keep its staff in their jobs and raise wages, thanks to a deal reached early on Sunday morning after hours of fevered negotiations.

Almost 60% of the bank's resident union then voted in favour of the deal.

Cleanup

The arrangement brings to an end industrial action which had forced the government to lend Chohung 2 trillion won ($1.7bn; �1bn) as customers withdrew money and half the branches were forced to shut their doors.

The way is now clear for Shinhan, backed by France's BNP Paribas, to complete its takeover.

The resolution of the dispute, brokered by Finance Minister Kim Jin-Pyo and Korean Financial Industry Union, comes as a relief to the government.

A number of financial institutions are majority-owned by the state, having been nationalised in the wake of the Asian currency crisis of 1997.