By Cho Jin-seo
WASHINGTON — KB Financial Group Chairman Euh Yoon-dae said that the banking group will restructure around 2,000 senior employees or about 10 percent of its workforce “through attrition” in order to make it financially strong enough for overseas expansion.
Euh told reporters on Oct. 8 that the group will also slash the annual employment of fresh graduates to 100 next year from the usual 600. Last month, he told The Korea Times that he would seek to turn the bank around.
“It is the consensus of the market that KB needs a restructuring of its human resources. You ask anybody, and they will give you the same answer,” he said during lunch with reporters, on the sidelines of the International Monetary Fund’s annual conference.
“We are not going to let go of young employees in their 30s. It will be senior employees with two or three more years to go, who will be encouraged to take an early retirement compensation package, so they can prepare for life after work.”
He did not elaborate on the exact timeline of the restructuring plan. KB affiliates have some 27,000 employees now — more than any of its rival banking groups in Korea.
Euh, former president of Korea University, said that the group plans to give the outgoing people temporary jobs as insurance salesmen, if they want.
As for the new recruitment, he said a big reduction is inevitable.
“We will hire only 100 next year, which is one sixth of the usual batch. I think Cheong Wa Dae will not like it because they are worried about youth joblessness, but it will not make sense if we hire many people while shedding jobs.”
The chairman said that the group will see a bad performance in the fourth quarter, because it will continue to accumulate loan-loss reserves. But he expected that earnings will improve rapidly next year.
“The fourth quarter will be tough. But when the earnings improve and the retirement program kicks in, then the stock price will skyrocket,” he said.
When that happens, KB will have the financial strength to start business expansion, he said. He said he was sorry that KB could not pursue a merger with Woori Financial Group as he promised when he first came to KB this summer.
“I wanted to (buy Woori). But I opened the books at KB for the first time and realized that we needed to put money in the loan-loss reserves first. I would like to buy anything should we have the power,” he said.
Euh is known as a strong advocate of the “mega bank” theory — that Korea needs to have its own super-size banking powerhouse such as Goldman Sachs or Citibank, in order to compete in the global market. He has faced opposition from many, who think the idea of having a too-big-to-fail bank is out of date in the post-crisis world.
“If a bank grows in size and market dominance grows, it won’t be bad for the Korean economy. I think we (Koreans) are afraid of being big. But we need not forget that some banks such as the Royal Bank of Canada has a market share of around 50 percent (and are still healthy),” he said.
Financial difficulties at KB have discouraged Euh from pursuing domestic banks such as Woori and Korea Exchange Bank. Instead, he is now saying that he wants to grow abroad, with Santander as a role model.
Euh is touring the world to meet overseas investors until Oct. 23. Leaving Washington, he said he would go east to meet representatives of the DBS bank of Singapore and Standard Bank of South Africa.
The two banks are thought to be Euh’s long-term targets for overseas expansion.
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