Securities Firms to Tighten Belts
Korean securities firms, which have enjoyed prosperity since 1998, are expected to tightening management in the coming year due to a possible sluggish stock market amid the overall economic slowdown.
According to industry sources, local securities companies are preparing for a rainy day, wrapping up their expansion-oriented management of the past two years by selling off office buildings and reducing their workforces.
Brokerage houses, except for investment trust-turned securities companies, opened a total of 150 branches and increased their workforces from 31,000 to 37,000 this year.
As many new securities firms made a debut in the market, the competition has become fierce. The number of securities-related ads surged to 700 as of late November this year, an eye-opening increase from 177 a year earlier.
Considering that the securities industry begins its fiscal year from March, the industry will be able to hold on to its existing expansion- oriented management strategy until February next year. After that, they will have to strongly tighten their belts and turn to frugal management.
Sources say that Hyundai Securities, which has enjoyed booming business in the bullish market since 1998, will carry out the biggest corporate restructuring among local securities firms.
The company is now negotiating with the American Insurance Group (AIG) of the U.S. on the sale of its shares, but negotiations have made little progress due to wide differences on infusions of public funds.
One Hyundai official said, ``The negotiation is delayed because AIG requested the government to inject public funds.''
Another official said, ``If the two firms reach an agreement, the management reduction plan will be visualized for a successful restructuring of the whole company. Workers are very nervous about the lay-off plan.''
LG Securities, suffering from wild rumors that LG Group faces a liquidity problem, decided to sell its office building to Korea Securities Depository, although one company official said that its decision to sell the main building is not the result of a liquidity crunch. …