Real Estate PF Hit? ... Daol Investment & Securities Staff Reduced by About 30%

502 Employees at Year-End Last Year → 352 at End of Q1 This Year
Legoland-Triggered Bond Market Crisis, Real Estate Downturn Impact
Sales Contract Terminations, Voluntary Retirement, Natural Decline During Year-End Job Change Season

Last year, as concerns over the insolvency of real estate project financing (PF) grew due to the Legoland-triggered bond market crisis and the real estate market downturn, it has been confirmed that about 150 employees recently left Daol Investment & Securities, which was hit hard. This accounts for approximately 30% of the total workforce.

According to the quarterly report of Daol Investment & Securities disclosed on the Financial Supervisory Service's electronic disclosure system, as of the end of the first quarter (March 31), the total number of employees at Daol Investment & Securities was 352 (166 regular employees and 186 contract workers). The total number of employees, which was 502 at the end of last year, decreased by about 30% in just three months.

Daol Investment & Securities attracted industry attention last year when rumors of a PF crisis circulated amid the real estate market downturn. This is because it is a securities firm that has grown by concentrating investments on relatively high-risk mezzanine and subordinated bonds during the real estate boom. In fact, Daol Investment & Securities recorded an annual operating profit of about 10 billion KRW in 2015, but after going through the real estate boom, it recorded an operating profit of 147.6 billion KRW in 2021.

However, the real estate market froze after the COVID-19 pandemic, delivering a direct blow. Daol Investment & Securities posted an operating loss of about 11.5 billion KRW in the first quarter of this year alone, turning to a deficit. To secure liquidity at the group level, subsidiaries such as Daol Credit Information in January and Daol Investment in February were consecutively sold. The core affiliate, Daol Investment & Securities, also implemented intensive restructuring from the end of last year to reduce costs. It appears that employees left during this process.

In particular, it has been confirmed that key personnel in real estate PF, who had been the main drivers of Daol Investment & Securities' growth, moved to competitors such as Meritz Securities. A total of 45 people, led by former Executive Director of the Development Finance Division at Daol Investment & Securities, Won-Byung Lee, transferred to Meritz Securities. While small team transfers occasionally occur, it is unusual for dozens of employees to move to a competitor all at once. Meritz Securities assigned some of them to the existing IB division and, considering the increased workforce, established a new 'IB Business Division 3' headed by Executive Director Lee.

During this workforce restructuring, it is reported that many executives at Daol Investment & Securities also tendered their resignations as part of sharing responsibility. However, among registered executives, except for former Vice Chairman Seok-Jong Choi who retired after completing his scheduled term, all others remained in their positions. The number of unregistered executives decreased from 36 at the end of last year to 29 as of March 31, a reduction of seven.

A Daol Investment & Securities official explained the reason for the reduction in personnel, saying, "Due to the nature of securities firms, most sales personnel who receive high performance bonuses are contract workers, and some contracts that ended at the end of the year were not renewed." He added, "We offered voluntary retirement to existing regular employees, and there was also a natural decrease during the securities industry’s year-end job transition season." Regarding the mass departure of personnel related to real estate PF, he said, "We could not afford to keep many employees in order to quickly establish a self-rescue plan to restore profitability," but added, "Although the real estate market is currently depressed, real estate finance is an area we have performed well in so far and will certainly continue to operate in the future."