Financial institutions seek early retirements

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Financial institutions seek early retirements


The big players in the finance industry have launched voluntary retirement programs to reduce head count expenses as the sector braces for unfavorable economic conditions next year.

The growing use of online and mobile banking also has negated the need for financial institutions to maintain its current size of their workforce, companies say.

KB Kookmin Bank, the country’s leading lender, said this week that about 3,000 employees will retire early through its recent program in which workers with tenure of more than 10 years and employees older than 55 are eligible.

It is rare for a company to include workers with just 10 years’ experience for the program given that early retirement often applies to those in their 40s and 50s.

“The spread of mobile banking reduced the need for a visit to a brick-and-mortar branch,” a spokesperson at KB Kookmin Bank said, “so we don’t need to maintain a large organization.”

In the aftermath of the global credit squeeze in 2008-09, KB Kookmin rolled out early retirement that saw 3,200 workers leave the company by 2010.

The bank said that the financial crisis dealt a harsh blow to the local banking sector, pushing lenders to secure dollars to repay maturing debts. In 2015, some 1,100 workers took voluntary retirements.

But critics say that the financial industry too often banks on the retirement programs for “easy layoffs,” even in good times.

This year, the major financial institutions saw earnings surprises as revenue surpassed market expectations.

NH Nonghyup Bank had about 400 applicants for early retirement last year while Standard Chartered Bank Korea had a target of 200 people.

Applicants will be those who have worked at the company for more than 10 years.

Shinhan and Woori workers who are older than 55 are eligible for early retirement benefits starting next year.

Mobile application and online banking have become the biggest route to managing accounts, leaving visits to branches in decline.

Internet banking comprised 42.8 percent of bank transactions as of September, according to data released by the Bank of Korea, while the share of in-person transactions shrank.

In 2012, the proportion was 13 percent but fell to 10.1 percent as of September.

The moves cut the number of employees in the banking sector.

The number of workers in the banking units stood at 132,170, the lowest level since 2008, at the peak of the global financial crisis.

The banking units are not alone in their efforts to reduce their headcount.

Life insurance companies also are jumping on early retirement programs.

Shinhan Life Insurance has encouraged workers with more than 20 years to apply for its voluntary program, as has AIA Life Insurance.

KB Investment & Securities also has launched an early retirement program.

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