By Kim Rahn
While “growth” and “job creation” are key objectives for the government, banks here are going against the stream, reducing recruitment and closing branches.
This is because they have suffered from plummeting profits amid low interest rates and bad loans from troubled companies. Such a move is likely to continue for the next couple of years unless the market situation greatly improves.
Banks almost halved their new hiring in the first half of this year which began at most banks in May.
Shinhan Bank decided to employ around 200 people, half the number it selected during last year’s first half. The quota of second-half recruitment, which usually takes place between November and December, is also likely to be 200 or less this year, while it was 400 a year before.
KB Kookmin Bank is hiring 46 people who graduated from overseas colleges, down from last year’s 92. It recruits domestic college graduates in the latter half of the year, and even if it keeps the quota to the same number as last year’s 100, the total recruitment this year will be 146, down by 25 percent from last year.
In early 1990 when the economy was flourishing, it used to employ around 1,000 rookies per year, about sevenfold the current number.
NH Bank, which employed 580 in the first half of last year, now picks 300. For the second half, it plans to cut the number from last year’s 558 to 200.
Woori Bank and Korea Exchange Bank (KEB) also reduced their quotas from last year’s 400 to 230 and from 221 to 125, respectively.
“It is natural for a company to reduce recruitment if it sees poor profits. Banks’ profits have decreased significantly due to low interest rates,” said an official of a bank on condition of anonymity.
Banks here posted 1.8 trillion won in net profit for the first quarter, 44.9 percent down from 3.3 trillion won in the same period of last year.
“It is also a social demand to turn the status of part-time workers into regular workers. Such change has raised our labor costs, so we had no other option but to reduce new employment,” said the official.
Another factor for reduced recruitment is a smaller number of customers visiting bank branches. Reports showed that people in Korea, the world’s most-wired country, use about 90 percent of banking services through the Internet without visiting branches.
So, banks have been closing branches, which has again led to reduced employment. Shinhan closed 12 branches this year, while NH shut down five, and Woori, three.
Headquarters are not an exception for “getting slim.”
KEB has cut the number of workers at its headquarters by 315 for the last one year, or about 30 percent of the total staffers there. Some of them were stationed at branches, some others quit, and others were temporarily suspended from duty.
Woori Financial Group recently decided to reduce the number of workers at the holding company from 170 to 90. Its banking arm will also transfer about 10 percent of its workers at the headquarters to branches.
“We may have to tighten our belts for the next several years by reducing as much cost as possible, including slimming down manpower,” the official said.