Shinhan conducts early retirement program for first time since 2009


The nation’s banking sector has been striving to cut workforces amid growing worries over low cost-efficiency from the lackluster earnings outlook.

Among the banks are Kookmin, Shinhan, Hana, Standard Chartered Korea and the National Agricultural Cooperative Federation. Others such as Woori and Citi will possibly follow suit.

Shinhan Bank, which conducted a large-scale personnel reshuffle on Thursday, said about 250 employees will quit by the end of January under a voluntary retirement program.

This is the first time that the commercial bank has received applicants for simultaneous retirement since about 600 employees left in late 2009.

Though Shinhan grabbed No. 1 in 2011 earnings in the banking industry, the bank’s strategies for this year include enhancing internal strength amid external uncertainties.

A securities firm forecast that Shinhan will see its earnings stay at 2.8 trillion won ($2.45 billion) in 2012, down 7.2 percent from 3.01 trillion won a year earlier.

Aside from cutting its payroll, the Jan. 26 personnel reshuffle of Shinhan is is part of the bank’s move to launch an independent business unit that connects the bank and its brokerage affiliate, Shinhan Investment Corp.

Over the past few months, a group of bankers from Kookmin, Hana, Standard Chartered Korea and the National Agricultural Cooperative Federation have left the industry.

At Standard Chartered Korea, about 800 employees, or 12 percent of the staff, applied for the early redundancy program.

The Korean unit of the U.K.-based banking group suffered the longest strike of unionized workers in the local banking sector last year.

The National Agricultural Cooperative Federation, also called Nonghyup, recently signed on 521 employees for its early retirement plan, sharply up from 130 workers a year before.

Kookmin Bank is accelerating its internal downsizing, transferring 219 underperforming employees to an extra department designed for retraining.

A certain portion of them will likely face dismissal or be pressured to quit if they fail to reach a certain level of performance within about two years.

The employees at the department are obliged to undergo training for six months. Those who show improvement and potential will be entitled to positions at regular departments.

Since the bank conducted a restructuring in November that saw the bank lay off more than 3,200 of its 26,000 employees, its moves to increase productivity have continued.

Kookmin’s senior executives, including CEO Min Byong-deok, have stressed that productivity has dropped due to widespread inefficiency in the overall sector and management indices have continued to worsen.

They said the bank has reached a crisis where it cannot provide foreign investors with confidence about the bank’s future.

The state-run Woori Bank is set to offer financial support to outgoing employees for a certain period when they voluntarily quit and work for other companies, as a program encouraging underperforming employees to hold other jobs.

Citibank Korea may also choose to cut the payroll this year though it suspended earlier plan for manpower restructuring in December.

By Kim Yon-se (kys@heraldcorp.com)