Fewer jobs found at brokerages

The number of brokerage firms employees has been on a decline for the past four years due to a downturn in the industry, according to a local think tank.

Local brokerage firms saw the number of its employees fall by more than 7,000 since late 2010, as many brokerages closed their doors or cut down on their number of branches due to a slump in the market slump and M&As, according to Korea Capital Market Institute (KCMI).

As of the end of June this year, the total number of employees at brokerages stood at 30,678, down from the 43,364 seen in late 2010 following industry-wide layoffs.

During same period, the number of brokerage branches fell to 1,156 from 1,818, while the number of brokerages themselves declined to 56 as of September this year, from 64 in late 2010.

KCMI cited active M&As among brokerages as a key factor.

Just last year, Yuanta Financial Group acquired Tong Yang Investment Bank, and Woori Investment & Securities merged with NH Investment & Securities. Meritz Securities also purchased IM Investment & Securities.

“The market had been too crowded with many small-size players, and they were competing for a limited pool of commissions. Apparently, layoffs alone were not enough to sustain the brokerages,” said Ahn Yoo-mi, a researcher at KCMI.

“And brokerages are actively pursuing M&As as an alternative way to remain [competitive],” she added.

Ahn added that regulatory changes in 2013 that included the loosening of regulations regarding owner’s capital for investment banks and the introduction of net capital ratio (NCR) had helped boost M&A activities within the industry.

“M&A helps strengthen areas of business with relative weakness and also boosts owner’s capital,” Ahn said.

“Smaller brokerages that rely on brokering fees can be pushed out of the market when profitability deteriorates. Smaller brokerages need to come up with differentiated products or sales strategies.”

BY LEE SEUNG-HO AND PARK JUNG-YOUN [park.jungyoun@joongang.co.kr]