Samsung prunes its securities, insurance units

Samsung took an ax to the management of its financial units after restructuring its chemical units early this month.

Layoffs are promised as well.

The action follows a decline in the profitability of the group’s financial units in an era of low interest rates.

“Amid low growth and profitability persisting in the securities industry, we might face a serious crisis if we continue our current practices,” said Kim Seok, CEO of Samsung’s securities unit, at the company’s headquarters yesterday.

The securities subsidiary will conduct both layoffs and downsizing of branches.

The company will encourage employees in their third year or more to voluntarily retire from Monday. The targeted number of employees is 300 to 500. For some staffers who voluntarily resign, the company will offer contract investment solicitor positions.

The company will reduce the number of senior executives from 36 to 30. Expenses by executives will also be slashed 35 percent. For example, high-level executives who used to travel in business class will have to get used to economy.

The number of branches will be reduced, although the number wasn’t confirmed.

Samsung Securities currently has around 100 branches across the country. Small ones will be shut or integrated with larger ones, the company said.

“As online and mobile transactions increase, we urgently need a new strategy for operating offline branches and their work forces more efficiently,” the CEO said.

Last year, the securities unit transferred about 100 employees to other subsidiaries of the group. The company had 3,280 employees in 2011, and the number keeps shrinking. After a restructuring last year, the securities unit ended up with 2,772 staff.

The layoffs and downsizing this year is a clear sign of crisis in the securities industry. Samsung Securities’ net profit plunged from 181 billion won ($174.5 million) in 2012 to 24 billion won last year.

Samsung Life Insurance also carried out organizational restructuring Thursday by integrating some overlapping teams and dismissing some high-level executives.

CEO Kim Chang-soo, who took office four months ago, is a renowned turnaround artist in the insurance field. Kim is recognized for reviving Samsung Fire and Marine Insurance.

According to a spokesman, the company decided to combine the current public accounting team with a risk management team, and the general accounting team and investors relations team with a finance team.

It will also downsize the corporate sales office and overseas business office by downgrading the chief’s title from senior vice president to vice president. Out of 78 senior executives, three have been sent to other subsidiaries and 12 were dismissed.

The life insurer’s annual net profits hovered around 1 trillion won but fell to around 580 billion won last year.

BY SONG SU-HYUN [ssh@joongang.co.kr]