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Brokerages, insurers rush to axe jobs

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By Lee Kyung-min

A growing number of financial firms in Korea are seeking to reduce their workforce due to deteriorating bottom lines compounded by the worsening business environment and recently tightened government regulations.

KB Securities and KB Insurance, subsidiaries of KB Financial Group, said discussions are underway between the management and union to solicit letters of voluntary resignation.

The securities arm of KB employs 3,100 workers and said that resignations will be accepted from those aged 43 and over by Dec. 12. It's the first reorganization since it acquired Hyundai Securities in 2017.

Similar steps are being taken with the 3,300 workers at KB Insurance, which merged with LIG Insurance in 2015, amid continued streamlining efforts to reduce the number of branches nationwide.

The 3,300 workers are among those in wage negotiation with the management during which they were forwarded an option to submit their letters of resignation.

A total of 118 workers at Mirae Asset Life Insurance under Mirae Asset Financial Group were let go in October. The cut of about 10 percent of the total number of employees was a necessary process to better adapt to fast-changing business conditions and to boost competitiveness, the firm said.

Mirae Asset Daewoo, a securities subsidiary of the group, is reported to be mulling a substantial number of job cuts in the coming months, a move vehemently disputed by union members who issued a statement in November. They denounced it as a "unilateral decision" to reduce the number of branches by 30 percent.

The push for the "voluntary" submission of the resignation letters at the major financial services firms in Korea are unwanted layoffs, triggered by Hyundai Card which accepted resignations from a handful of senior executives Nov. 8.

The card firm said the seniors had to go following a recommendation from the Boston Consulting Group, which said 400 of the firm's 1,600 workers should be cut.

Early 2018, the industry leader Shinhan Card let go 200 workers that had accounted for 8 percent of the total, in continued streamlining efforts since 2008.

The job cuts for securities firms, stemmed largely from the falling profit margin, following a bearish stock market in October.

Their net income between July and September decreased 23.1 percent to 288.2 billion won ($251 million) from 957.6 billion won from three months earlier.

Non-life insurers also saw their combined net income drop by 623.9 billion won in the first nine months of 2018 from the previous year, mostly due to a soaring loss rate in auto insurance.

Loss rate is the rate of insurance money paid to subscribers from companies' premium income.

The operating loss for life insurers soared to over 1.2 trillion won in three quarters from the previous year while their premium income slid over 3.8 trillion won in the same period.

Card firms are no exception.

Many of them are considering manpower restructuring following the government's push to lower transaction fees by 1 trillion won, which they claim will inevitably hurt their profitability.

Lee Kyung-min lkm@koreatimes.co.kr


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