Korean brokerages' restructuring targets investment banking units

South Korea’s small- and mid-sized brokerage houses have begun their workforce reductions ahead of the end of the year. The brokerages are set to cut around 10-30% of their staff this month, restructuring investment banking (IB) businesses that suffer poor earnings, The Korea Economic Daily understood on Nov. 9.

Korea’s Daol Investment & Securities Co., formerly KTB Investment & Securities, sent the six employees of its bond structuring team notices of non-renewal of their contracts on Wednesday. The firm is said to have decided to restructure due to increased losses from bond investment and decreased assets under management (AUM).  

The workers who received non-renewal letters joined the firm two years ago and didn’t meet the brokerage’s performance standards, a Daol official said.              
Another mid-sized brokerage Cape Investment & Securities Co. also sent non-renewal letters to all staff of its corporate sales and research business units on Nov. 1, citing that market conditions will worsen next year.

BNK Securities Co., a Busan-headquartered mid-sized brokerage firm, has started regulating employees’ use of corporate credit cards in addition to its restructuring plans, according to an IB source.

Reduction in IB workforce will target bond investment units first, then real estate project financing divisions, market insiders said.   

“Some bond investment units have been already restructured due to huge losses from interest rate hikes and the Legoland developer's debt default. Project financing units will be restructured once their assets turn distressed.” a brokerage firm source said.

Some major brokerage firms are forecast to cut their workforce soon due to falling earnings since the third quarter, market insiders said.

Brokerage giant Mirae Asset Securities Co. saw its quarterly operating profit fall 62.3% to 149.8 billion won, compared with the third quarter of 2021, on a consolidated basis. KB Securities Co. posted 112.8 billion won in quarterly profit, with a 52.2% drop during the same period. Shinhan Investment & Securities Co.’s third-quarter profit fell 50.3% to 268.4 billion won, compared with the same quarter last year.


Write to Ji-Hye Min, Jin-Hyoung Cho and Sung-Mi Shim at spop@hankyung.com
Jihyun Kim edited this article.