State-owned Korea Development Bank has started intensive restructuring of a life insurance unit whose sales attempt had flopped last year. KDB laid off 40 percent of KDB Life Insurance executives for failure in asset sale and asked an outside consulting firm to diagnose the management of the life insurer.
According to investment banking sources on Thursday, KDB dismissed six standing executives including a chief financial officer of KDB Life Insurance in March. KDB Life Insurance had 15 standing executives.
Although the dismissal falls with the expiration of their tenure, it also represents disciplinary measures to hold them responsible for bad performance that led to the failure in sale, the bank said.
KDB failed to sell the life insurance business last year due to price differences. KDB Life Insurance last year swung to a net loss of 10.1 billion won. KDB must slim down the organization and raise profitability to appeal to new buyers.
KDB is waiting for due diligence report from SIG Partners, a foreign financial consulting firm, which conducted management diagnosis of the insurer. KDB wants to complete restructuring of KDB Life Insurance in the first half of this year based on the findings available by May. The restructuring measures reportedly include layoffs and reassignment of workers, closure of some branches, and scrapping of some policies.
By Yoo Tae-yang
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