Labor Union-Recommended Director System at a Crossroads, Financial Sector Focuses on SooEun

Korea Eximbank to Launch Candidate Recommendation Committee Next Week
Korea Eximbank Labor Union Makes Another Attempt, "Searching for Candidates"
If Korea Eximbank Fails Like Kiwoom, Momentum May Be Lost

[Asia Economy Reporter Jin-ho Kim] Attention on the labor union-recommended director system, a campaign pledge of the Moon Jae-in administration, is turning toward the Korea Eximbank, a policy bank. Since the attempt by IBK Industrial Bank, which was considered likely, has fallen through, if the system is also not introduced at Eximbank, the momentum for promotion within the current administration's term will effectively disappear.

According to the financial sector on the 7th, Eximbank will activate the director candidate recommendation committee next week as the term of outside director Nam-hyun Na ends on the 31st. The Eximbank board consists of a total of six members: three full-time directors and three outside directors.

Unlike the labor director system, the labor union-recommended director system does not require legalization. It can be introduced as long as there is labor-management consultation, and it is regarded as a means for labor unions to intervene in corporate management rights. If Eximbank succeeds in introducing it, the outside director attending as a labor representative will have speaking and voting rights and participate in the institution's decision-making.

The Eximbank labor union is currently searching for candidates to recommend to the committee. Earlier, in line with the expiration of two outside directors' terms in January last year, candidates were recommended but the effort failed, so this year they are determined to appoint a labor union-recommended person as an outside director. Shin Hyun-ho, chairman of the Eximbank labor union, said, "We are contacting candidates from various angles to recommend to the committee. After the committee is formed next week, we will officially request the appointment of a labor union-recommended director to the company around mid to late this month."

It is also reported that the Eximbank labor union is directly pressuring the Ministry of Economy and Finance, the higher authority with appointment rights. They are emphasizing the Ministry's agreement last November at the Economic, Social and Labor Council to actively introduce the labor union-recommended director system with public institution unions.

Labor Union-Recommended Director System at a Crossroads, Eximbank's Adoption is Key

The active stance of the Eximbank labor union is largely due to the labor union-recommended director system being at a crossroads. Following the failure of introduction at commercial banks such as KB Kookmin Bank and IBK, there is a sense of crisis that this attempt at Eximbank could be the last. A financial sector official said, "As the Moon Jae-in administration faces a lame-duck period, concerns are spreading that no further introduction of the labor union-recommended director system can be expected. Whether Eximbank succeeds in introducing it will determine if the issue sinks beneath the surface or resurfaces."

However, the attempt to introduce the labor union-recommended director system at Eximbank is also expected to face significant obstacles. As seen in the previous IBK case, even if Eximbank President Moon Byung-kyu includes a labor union-recommended candidate in the candidate pool and proposes them, the candidate may be filtered out at the final stage by the Ministry of Economy and Finance depending on their ranking. In fact, last year, the Eximbank labor union's recommended candidate was proposed at a lower priority and ultimately was not appointed.

The possibility of replacement of Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, who holds appointment authority, is also a burden. Since the usual timetable takes about two months, if a new minister comes in, the process is likely to be pushed aside. Chairman Shin said, "If the Minister of Economy and Finance is replaced, I expect the process of introducing the labor union-recommended director system to take a long time. If the system is not implemented this year, we will launch a strong struggle together with the financial labor union."