Published : Jan. 6, 2016 - 18:02
Hit by a sluggish stock market, securities companies here have cut nearly 8,000 jobs over the past four years and more layoffs are expected this year, industry sources said Wednesday.
Falling earnings and upcoming takeover deals among local brokerage houses will push them to undertake restructuring measures this year, according to experts.
The financial district of Yeouido in Seoul (Yonhap)
Especially, sales staff at small branches are on the verge of losing jobs as a growing number of people opt to buy and sell stocks online instead of visiting physical offices.
Data by the Korea Financial Investment Association show that the number of employees who worked for brokerage firms stood at 36,096 as of September 2015, down 18.1 percent, or 7,964, from 44,060 in 2011 when the figure was at its peak.
During the same period, firms closed down 639 branches, taking the count to 1,217 from 1,856.
“Downsizing of the securities industry by jobs cuts and branch closures is a global trend that developed countries like the U.S, Japan and European countries are already undergoing,” said a Korea Financial Investment Association official.
He said the reductions stem from various factors from cost-cutting efforts in the aftermath of the global financial crisis and the Internet development to low interest rates and an aging society.
The brokerages’ deteriorating balance sheets also signal looming restructurings.
In the third quarter of 2015, the combined net profit of 56 brokerage houses came to 747.2 billion won ($652.2 million), a whopping 38.7 percent drop from three months earlier, due to huge losses from derivatives amid a bearish stock market.
Most recently, IBK Securities offered a voluntary early retirement program, saying it will provide a bonus worth up to 24 months of salary depending on years of service to applicants.
Strong mergers and acquisitions activity among brokerage houses is expected to fuel workforce layoffs in the sector.
In late December last year, Mirae Asset Financial Group chairman Park Hyeon-joo who complete his successful bid to acquire KDB Daewoo Securities, the country’s second-largest brokerage, said he didn’t consider any downsizing after the takeover. But market insiders were skeptical of the pledge.
“There are many securities firms that promised to retain employees, but failed to do so, like NH NongHyup Financial, which cut hundreds of workers after merging its affiliate NH NongHyup Securities with Woori Investment & Securities in 2014,” a source that declined to be named said.
By Park Han-na
(
hnpark@heraldcorp.com)