The Korea Exchange Bank (KEB) has sequestered some KRW545m won in an account belonging to the Hyundai Motor union.

The move came after a ruling by the Supreme Court in favour of Hyundai Motor's main creditor bank in its legal effort to retrieve the sum over a loan given to a subcontractor who provided gifts to Hyundai Motor union members during its foundation party in 2006.

"It was not a forceful withdrawal but a step taken according to a legal procedures," a bank spokesman told the Korea Times.

KEB took legal action after the subcontractor failed to repay a loan, and the highest court ruled in favor of the bank in June.

"We just followed the procedures by taking the relevant sum from the union's account, which was signed as guarantor in case of default," the KEB official said, adding the bank was led by Richard Wacker at the time and it was not clear whether the former head knew about the deal.

The union, in turn, has decided to sue Park Yoo-gi, its then-union leader who now heads the nation's metal workers union.

It was reported Park knew the subcontractor was not capable of fulfilling an order but nonetheless provided repayment guarantees.

The case has taken a further twist as one of the union's leaders received a prison term while Park resigned.