New Co-CEOs? Yoon Ho-young Alone?…Kakao Bank Contemplates Leadership Restructuring (Comprehensive)

No Absolute Insistence on Co-CEOs Atmosphere
Challenge of Balancing Identities Between Financial Companies and ICT Firms

From the left, Lee Yong-woo and Yoon Ho-young, Co-CEOs of Kakao Bank (Image source = Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] Whether to maintain the co-CEO system or transition to a sole CEO system under Yoon Ho-young. Kakao Bank Korea (Kakao Bank) appears to be taking a breather ahead of reorganizing its management structure following the political recruitment of co-CEO Lee Yi-woo.

According to financial circles on the 20th, Lee, who was recently selected as the Democratic Party's '7th recruitment talent' and has expressed his intention to resign from Kakao Bank, is currently in the final stages of handing over his duties, focusing on minimizing the gap caused by his departure. A Kakao Bank official said, "It will likely take a little more time to finalize Lee's resignation," adding, "As usual, he is processing remaining tasks while concurrently using his annual leave."

Kakao Bank is expected to make a decision regarding its future management structure after the Lunar New Year holiday through a board meeting. If Kakao Bank decides to maintain the co-CEO system, it must hold a nomination committee meeting before the shareholders' meeting scheduled for the end of March to appoint Lee's successor. If the co-CEO system is not maintained, co-CEO Yoon will lead Kakao Bank as the sole CEO. Yoon's term lasts until January next year.

Inside Kakao Bank, it is known that there is a growing sentiment that "there is no need to insist on the co-CEO system just because it has been that way until now." Given that Kakao Bank has a stronger ICT company profile compared to traditional banks, the logic is that management efficiency can be maximized by giving full authority to co-CEO Yoon.

Co-CEO Yoon has worked to integrate information and communication technology into finance, based on his experience as head of ERGO Daum Direct's management planning team, head of Daum Communications' management support division, and vice president of Kakao Mobile Bank's task force team (TFT). The fact that Kakao Bank turned profitable within two years of its launch and surpassed 11 million customers is largely attributed to its identity as an internet-only bank and not being trapped by the organizational logic of a traditional "financial company."

On the other hand, there are voices saying that for the second half of this year’s initial public offering (IPO) and other purposes, the financial company image symbolized by co-CEO Lee should be made clearer. Lee, a former research fellow at Hyundai Research Institute, entered the financial industry as an executive director at Dongwon Securities and has nearly 20 years of experience as a "finance man," having served as head of strategic planning at Korea Investment Holdings, head of asset management at Korea Investment & Securities, and chief investment officer at Korea Investment Trust Management. A financial sector official said, "There seems to be significant internal debate over whether Kakao Bank is a bank or an ICT company."

Another key factor is the judgment of Korea Investment Financial, the second-largest shareholder. Originally, Korea Investment Financial was the major shareholder of Kakao Bank, but in November last year, based on the Internet-only Bank Special Act, Kakao became the major shareholder. Currently, Kakao holds 34%, Korea Investment Financial holds 5% minus one share, and Korea Investment Value Asset Management, a subsidiary of Korea Investment Financial, holds 29% of the shares.

Meanwhile, following the resignation of former Korea Investment Financial vice chairman Kim Joo-won from Kakao Bank's inside director position in December last year, and the departure of co-CEO Lee, also from Korea Investment Financial, some analysts suggest that the link between Kakao Bank and Korea Investment Financial may loosen somewhat. Although Korea Investment Financial has stepped down as the second-largest shareholder, it still holds significant influence, and given the high symbolic value of the "Korea Investment Financial-Kakao synergy," there is also a view that it will somehow remain involved in management.

Meanwhile, co-CEO Lee gave up 520,000 Kakao Bank stock options upon joining the Democratic Party. At a press conference on the 12th, he said, "I am a CEO who has led companies with innovation and created quite successful companies," adding, "Now, I intend to realize the innovation I experienced on the ground in politics."