Banks, brokerages, insurance firms carry out early retirement plans to cut costs
Korea’s financial sector is headed for a fresh round of restructuring, with major banks pushing employees to opt for early retirement plans amid growing worries over the lackluster earnings outlook.
Domestic banks, brokerages and insurance firms are taking steps to reduce their workforces as they brace for lower earnings due to the stronger regulatory supervision including a cut in commission fees and the uncertainties linked to the eurozone debt crisis.
The most commonly used tool is an early retirement plan or other indirect inducements aimed at slimming the workforce to cut costs.
In the banking sector alone, as many as 2,000 people are expected to lose their jobs at year-end and early next year.
Kookmin Bank is set to deploy the early retirement plans for some 130 employees. The lender is now in talks with its labor union to determine the specific timing and conditions.
Woori Bank is planning to offer a job transfer support package from April through May. Under the system, the bank provides a sort of support money to former employees who get new jobs for a certain period of time.
Nonghyup, an agriculture cooperative, recently signed on 521 employees for its early retirement plan, sharply up from 130 workers late last year.
Hana Bank, which sent home 378 workers through early retirement plans, is widely expected to further tighten its belt and opt for more restructuring measures once it completes the takeover of Korea Exchange Bank next year.
SC First Bank also cut its workforce by 12 percent, or some 800 workers, this year through similar measures, while Citibank Korea balked at conducting a major restructuring plan including a layoff of some 100 workers in the face of strong opposition from its union.
Lenders are increasingly required to reduce costs and bolster their earnings as their profit outlook for 2012 looks grim. According to financial information provider FnGuide, the aggregate net income of the country’s four major banking groups are forecast to fall 6.62 percent on-year to 8.89 trillion won ($7.74 billion).
A storm of restructuring is also sweeping other financial segments. Brokerages such as Mirae Asset Securities and Samsung Securities, as well as insurance firms laid off employees or plan to ask workers to go for early retirement plans.
The brokerage market, faced with restructuring pressure, has a combined workforce of about 44,000 employees as of end-September, up a whopping 1,700 from a year earlier. Despite the expanded employee base, their income slumped due to the downdraft of the stock market in connection with the eurozone debt turmoil in recent months.
By Yang Sung-jin (email@example.com