Securities firms’ leaders face uncertainty ahead of reshuffle

Leaders of securities firms face uncertainty over possible reinstatement ahead of potential reshuffles in top management positions amid their steep earnings fall, sparked by prolonged hawkish rhetoric of major central banks here and abroad.

Most major brokerage houses reported noticeable earnings growth in 2021 due to coronavirus-induced liquidity effects. But sentiment then took an abrupt turn for the worse from the beginning of 2022 after the U.S. Fed started its aggressive rate hikes. The Bank of Korea has followed suit with the aim of curbing inflation, which has put the brakes on local stocks’ earlier momentum.

According to the securities industry, KB Securities co-CEOs Park Jeongrim and Kim Sung-hyun complete their terms at the end of 2022. Others facing a possible leadership reshuffle in March next year include Mirae Asset Securities, Korea Investment & Securities and Hana Securities.

KB Securities reported a net profit of 303.7 billion won for the first three quarters combined this year, down 44.1 percent from the previous year. Other major securities firms also face a similar circumstance amid bleak market sentiment.

However, it remains to be seen whether the earnings fall will cause a significant impact on their possible reshuffle, as the stock market doldrums were mainly caused by external factors — such as the Fed’s monetary tightening and the outbreak of war in Ukraine.

Market insiders also said the earnings report will not be a determining factor for this year’s year-end top management reshuffle.

“Almost all of the securities firms reported sharp earnings falls in 2022 due to uncontrollable external risk factors, so it appears unreasonable for them to carry out any drastic leadership reshuffle simply due to that factor,” an industry source said. “Most leaders are paying more attention to maintaining stability in their business operations during this period of stock market uncertainty. Given that the market is forecast to remain volatile even until 2023, most brokerage houses will refrain from taking additional risks in the form of organizational reforms.”