According to the financial industry on the 14th, a total of 54 CEOs at five major financial affiliates—including 10 at KB Financial Group, 12 at Shinhan Financial Group, 13 at Hana Financial Group, 12 at Woori Financial Group, and 7 at Nonghyup Financial Group—will see their terms end at the end of this year. Among them, the terms of KB Kookmin Bank President Lee Hwan-ju, Shinhan Bank President Jeong Sang-hyeok, Hana Bank President Lee Ho-sung, Woori Bank President Jeong Jin-wan, and NH Nonghyup Bank President Kang Tae-young will all expire on December 31.
In February of next year, Lee Chan-woo, Chairman of NH Nonghyup Financial Group, will also complete his first term. Since NH Nonghyup Financial Group begins its management succession process three months prior to the expiration of a term, the selection of the next chairman is expected to begin in earnest starting at the end of this year.
Strengthening the independence of financial holding company boards of directors has emerged as a key issue in recent corporate governance reforms within the financial sector. Concerns have long been raised that, within financial holding companies, the incumbent chairman exercises direct or indirect influence over the appointment of outside directors, and that the board formed in this way then supports the chairman’s reappointment. This suggests that the problem lies not so much in long-term reappointments themselves, but rather in a structure where checks and balances between the CEO and the board do not function properly.
Recently, pressure surrounding this issue has intensified further. President Lee Jae-myung publicly criticized the long-term tenures of financial holding company chairmen and the problems of closed corporate governance as a “corrupt inner circle” (a closed power group). Financial authorities are also pushing for corporate governance reforms to enhance board independence and the fairness and transparency of CEO appointment procedures.
The revised Commercial Act, which took effect last July, is also cited as a factor promoting change within boards of directors. It changed the existing term “outside director” to “independent director” and explicitly stipulated that such directors must perform their duties independently of inside directors and executive officers. The law thus went beyond simply appointing external figures to the board, explicitly mandating that they make decisions independent of management.
The selection of Lee Jae-geun as KB Financial Group’s next chairman is a symbolic example reflecting the prevailing emphasis on board independence. It is reported that during this decision-making process, members of the Chairman Candidate Recommendation Committee did not coordinate their opinions in advance regarding any specific candidate. Kim Dae-jong, a professor in the Department of Business Administration at Sejong University, stated, “I believe this decision was influenced by an atmosphere in which outside directors sought to make independent judgments without being biased toward a specific candidate or the incumbent chairman.” He added, “Rather than a phenomenon unique to KB Financial Group, this can be viewed as a trend spreading across the entire financial sector as financial regulators and the market emphasize transparency in the corporate governance of financial holding companies and the accountability of outside directors.”
This shift is expected to influence CEO appointments at financial institutions scheduled for the end of the year. In particular, the terms of CEOs at major financial holding company subsidiaries—including the heads of the five major banks—are set to expire in succession. Observers predict that boards of directors will conduct stricter evaluations of performance, future growth strategies, and leadership capabilities rather than routinely rubber-stamping the reappointment of incumbents.
At KB Financial Group, Lee Hong-gu (CEO of KB Securities), Koo Bon-wook (CEO of KB Insurance), Kim Young-sung (CEO of KB Asset Management), Bin Joong-il (CEO of KB Capital), and Seong Chae-hyun (CEO of KB Real Estate Trust) are set to complete their third-year terms, raising the possibility of replacements. Among Shinhan Financial Group’s major affiliates, Park Chang-hoon, President of Shinhan Card, is expected to be replaced, while at Woori Financial Group, some CEOs of affiliates with banking backgrounds are also expected to be replaced. At Hana Financial Group, CEOs of major affiliates—including Kang Seong-mook of Hana Securities and Seong Young-soo of Hana Card—are widely expected to be up for consideration. At Nonghyup Financial Group, seven executives, including Kim Hyun-jin, CEO of NH Venture Investment, are completing their terms.
However, some point out that “independence” should not be equated with making decisions that differ from those of the incumbent CEO. This is because even if an incumbent is reappointed, it can still be considered an independent judgment if the decision follows a thorough vetting process and discussion. Nor does the mere fact that a generational transition has been chosen prove the board’s independence.
Kim Yong-jin, a professor in the Department of Business Administration at Sogang University, pointed out, “It is more important to evaluate who can best foresee the future and lead the organization effectively than to vote objectively,” adding, “If the board of directors does not engage in a thorough discussion regarding the succession plan, there is a high likelihood that it will, conversely, choose the worst possible outcome.”
