Job Axe Arrives in Financial Industry
By Kim Jae-kyoung
Staff Reporter
With the economy entering a deeper downturn, a massive layoff is arriving in the local banking industry, threatening a large number of bankers who enjoyed huge bonuses during their heyday.
Once job losses materialize in the sector, it is probable that it will trigger a domino-like effect in other fields. It is feared massive layoffs will drive the economy into an even more painful slowdown by dampening consumer and business sentiment.
According to industry sources Tuesday, job losses are likely to be concentrated at foreign banks operating here as they are moving to slim down through layoffs or voluntary retirement schemes in line with their global restructuring move.
Citibank Korea is mulling over shedding jobs through a voluntary retirement scheme in the midst of Citigroup's move to cut 22,000 jobs globally. The voluntary scheme is a restructuring program designed to encourage staff to retire voluntarily with pension benefits and compensation.
``Citigroup has gone into restructuring mode globally to cushion the blow from the global economic slowdown and sharpen competitiveness,'' an international bank official told The Korea Times, asking not to be named.
``So far a total of 12,400 Citigroup employees left the company globally and more cuts are coming. Citibank Korea is now in talks with the labor union to discuss details of the voluntary retirement scheme,'' he added. Citibank Korea reduced its workforce by 130 last year.
SC First Bank, the Korean arm of British Standard Chartered Bank, has already slashed 193 jobs through a voluntary scheme since September and dispatched 143 back office employees to sales branches to boost efficiency.
HSBC Korea has yet to unveil any job cut plan. But it is also likely to be affected by its parent firm's restructuring drive. According to sources, the Asian arm of HSBC Holdings may cut 600 more staff as economic conditions worsen.
In September, HSBC cut 1,100 employees worldwide, including 100 in Hong Kong, due to poor performance in the first half.
However, an HSBC Korea official denied any job cut plan, saying, ``We haven't heard about any layoff plan from Hong Kong or London.''
Global investment banks and brokerages are also bracing for a new round of job cuts to reduce costs to survive amid the deepening global economic recession.
Goldman Sachs has moved to slash 3,200 employees globally, around 10 percent of its global workforce, to minimize shockwaves from an anticipated business slowdown, which has equally affected the investment bank's Korea office. Merrill Lynch has lost an estimated 5,700 enployees while Morgan Stanley has made 4,400 workers redundant, according to Bloomberg data.
Hana Daetoo Securities also plans to cut up to 200 jobs through a voluntary retirement scheme to brace for worsening business conditions. The brokerage said that it would receive applications from today.
``Local financial companies are set to slim down to lower costs through job cuts in the face of worsening business conditions caused by a deepening economic slowdown,'' a local brokerage official said on condition of anonymity.
``Given that all brokerages are exposed to shocks from the economic slowdown, I think that Hana's move is just the beginning of a series of job cuts in the financial industry,'' he added.
Korean banks have yet to join in as they have been striving to streamline their operations by reducing or integrating their branches.
Shinhan Bank has consolidated around 100 branches, while Kookmin Bank, the nation's largest lender, has put a halt on setting up new branches. Woori Bank meanwhile has shut down money-losing branches.