The securities division of South Korean electronics giant Samsung has eschewed its aspirations of becoming an international broking powerhouse and will cull its international staff and close down foreign offices, according to sources familiar with the matter.
“New York, London and Singapore will shut and Hong Kong will be reduced,” said a source well acquainted with the decision. “Samsung once saw Nomura as a model for how an Asian broker could expand internationally but top management have decided to change direction and concentrate on servicing clients domestically in South Korea.”
Japanese bank Nomura began its international expansion in earnest in 2007 with the acquisition of agency broker Insinet and quickly enlarged its global footprint with by purchasing most of Lehman Brothers’ Asian operations and European equities and investment banking business in October 2008.
Following a similar blueprint, Samsung Securities had been hoping to become a leading regional player in Asia by “leveraging its expansion into Hong Kong as a stepping stone to reach additional Asian markets and to establish an Asian regional platform", the firm advertised on its website.
In the past two years, Samsung Securities has grown from just 20 staff in Seoul to 180 spread across offices in Hong Kong, London, New York, Tokyo and Shanghai. According to a Samsung source outside Asia, most of the international staff will be made redundant.
“Market conditions have not been favourable for an expansion,” said one source who spoke on condition of anonymity so that they could speak freely. “Many people were expecting very drastic staff cuts of around 60%, but not whole closure of the international operations.”
Earlier this month, the firm suspended brokerage services for Hong Kong.
Samsung Securities still maintains its position as one of the leading local brokers in South Korea, servicing domestic institutional and retail customers and providing a gateway for foreign investors looking to penetrate the Korean Peninsula. In August, the broker joined technology firm Orc Group’s ExNet broker connectivity network, to meet demand from US and European high-frequency traders for access to the Korea Exchange.
According to Bloomberg, Samsung Securities’ share price rose 2.6% to 62,900 won on 1 February, when rumours of a potential closure first arose.