South Korean financial firms are implementing pay cuts and layoffs as the global economic slump threatens their profits.
Growth of South Koreans' credit card spending decelerated in the first half from a year earlier mainly due to the local economy's slowdown, according to Credit Finance Association, which damaged the firms' earnings.
The earnings were also dented by the government measures to curb credit card firms' excessive competition by setting ceilings on loan increases and marketing costs, CREFIA added.
Local credit card firms including Hyundai Card Co. are scrambling to streamline their business operations, they said.
Hyundai Card reduced its number of business division from 140 to 121 to cope with faltering earnings, the company said.
Local insurers also expect a massive layoff following damages on their profitability due to the economic slump, while ongoing acquisitions may add to further job cuts, market watchers said.
On the other hand, banks are striving to find alternative ways to cut costs.
Top player Kookmin Bank is planning to extend the length of unpaid vacations in an effort to cut labor costs, while other banks are preparing similar measures, market sources said.
Nonghyup Financial Holdings Co., the fifth-largest financial holding company in South Korea, also slashed its executives' salary by 10 percent while suspending costly corporate events, a company official said.
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