Restructuring Rumors Fired by Cape Securities...Securities Industry Calls Them "Baseless" (Comprehensive)

[Asia Economy Reporter Kwon Jae-hee] Cape Investment & Securities' decision to abolish its corporate sales and research divisions is causing ripples in the securities industry. This comes as rumors circulate within the industry that securities firms have begun a series of restructurings following the Legoland shock. Previously, the securities industry had faced turmoil due to the Legoland issue and actively responded to dismiss restructuring rumors.

On the 2nd, Cape Investment & Securities announced it would abolish its Corporate Headquarters and Research Headquarters. Although there are plans to reorganize as an investment-specialized company afterward, this is interpreted as a de facto decision to restructure.

A representative from Cape Investment & Securities stated, "We will close the organizations, and employees who wish to remain will be reassigned to similar tasks."

The representative added, "We have been reviewing the closure of these organizations over several years to improve organizational and personnel efficiency. Moving forward, we plan to focus on investment banking (IB) and proprietary investment (PI) businesses."

Cape Investment & Securities recorded operating revenue of 352.4 billion KRW and operating profit of 51.3 billion KRW last year. However, its performance has deteriorated due to this year's base interest rate hikes. It posted an operating loss of 2.3 billion KRW in Q1 and an operating loss of 5.9 billion KRW in Q2, with the deficit expanding.

The securities industry views that, amid worsening liquidity for small and mid-sized securities firms due to issues such as Gangwon Province's refusal to guarantee payment related to Legoland asset-backed commercial paper (ABCP), the research divisions with high fixed costs have been restructured.

A representative from a major securities firm explained, "Research centers are not profit-generating departments, so when the market and liquidity worsen, they can become a burden to securities firms. Until last year, securities firms performed well and hired many personnel, but this year, considering market conditions and real estate project financing (PF) risks, they will have to contemplate workforce reductions."

Starting with Cape Investment & Securities' restructuring, the securities sector has once again been shaken as information sheets detailing layoff plans of various securities firms circulated. These sheets indicated that each firm plans to restructure between 10% and 50% of their total workforce.

Most securities firms named in the information sheets have denied the claims as "groundless."

A representative from Securities Firm A said, "It's nonsense," and denied, "If we restructure according to the numbers in the information sheets, it basically means we are closing business next year."

A representative from Securities Firm B also stated, "It is completely unfounded," adding, "If we were to lay off 30-50% of the total workforce, that would mean at least 150 people based on simple calculations. The numbers themselves are absurd, and there are no restructuring plans."

This content was produced with the assistance of AI translation services.