April 11 (Bloomberg) -- Samsung Securities Co., South Korea’s largest brokerage by market value, plans to cut an unspecified number of jobs and branches as profit declines.
The company will accept voluntary early retirement from employees who have worked more than three years, Chief Executive Officer Kim Seok told staff members today, according to a statement from the Seoul-based brokerage. It will also reduce executive expenses such as travel costs, he said.
Samsung Securities is the second major financial firm to announce branch closures in South Korea this week after Citigroup Inc.’s local banking unit said it will shut almost a third of its outlets. Profitability of brokerages and banks is weakening as Asia’s fourth-biggest economy slows compared with the pace seen in the years before the global financial crisis.
“The restructuring is positive as it will add efficiency and boost performance overall,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management, which oversees about $33 billion. “This is an ongoing theme for the industry as other brokers have also been making efforts to slim their organizations and cut costs.”
Shares of Samsung Securities were unchanged at 12:01 p.m. Seoul time. The stock lost 4.3 percent this year, compared with the benchmark Kospi index’s 0.8 percent drop.
South Korean securities firms posted combined losses of 109.8 billion won ($106 million) for the nine months through December, the first deficit since 2002, the Financial Supervisory Service said on Feb. 20. The losses compared with profit of 787.7 billion a year earlier, FSS data show. Local brokerages including Samsung Securities changed their accounting period last year.
“The brokerage industry is facing a tough environment amid low growth and low profitability,” CEO Kim said in the statement. “If current conditions continue, we face a crisis that will threaten our survival.”
The company hasn't decided how many jobs and branches will be eliminated and doesn't have an estimate for the potential cost savings, spokesman Ha Jung Seok said by phone today.
Samsung Securities posted net income of 11 billion won for the nine months ended December, compared with 163.7 billion won profit for the year ended March 2013, according to a filing. The firm, 20 percent owned by affiliates of Samsung Group, had 100 domestic branches as of December and 2,554 full-time workers, a regulatory filing shows.
Citibank Korea Inc. said earlier this week that it will close 56 of its 190 branches to focus on digital banking and concentrate businesses in six major cities including Seoul.
To contact the editors responsible for this story: Chitra Somayaji at firstname.lastname@example.org Russell Ward, Darren Boey