Shin Yong-byeong, Shinhan Financial Group Chairman, Emphasized Voluntary Retirement
But Position Shift in a Day Sparks 'Government Pressure' Speculation
NH and Woori Financial Also Face Uncertain Reappointments
[Asia Economy Reporter Minwoo Lee] Cho Yong-byeong, chairman of Shinhan Financial Group, who was expected to serve a third term, suddenly stepped down. In the financial sector, this move is considered a major twist, with even rumors of government 'external pressure' circulating. There are also forecasts that other financial groups such as Woori Financial Group and NH Nonghyup Financial Group may see their heads replaced one after another.
According to the financial sector on the 9th, Jin Ok-dong, president of Shinhan Bank, was appointed as the next chairman of Shinhan Financial Group. The dominant reaction is 'surprise.' This is because the atmosphere initially favored Chairman Cho Yong-byeong’s third term as the most likely outcome. Even the group’s employees were greatly unsettled.
Until the day before the chairman candidate interview committee’s interview, Chairman Cho was said to have had a strong will to continue his term. Both performance and internal foundations were solid, and Chairman Cho was even considering organizational restructuring to the extent of suggesting the establishment of a vice chairman position within the group. However, Chairman Cho reportedly volunteered to be the last among the three candidates to be interviewed and then expressed his intention to step down. At that moment, Chairman Cho strongly expressed his resignation, saying, “Even if I were to be unanimously endorsed, I would decline.” It is said that even President Jin was surprised, not expecting Chairman Cho’s resignation.
On his way home that day, Chairman Cho told reporters, “I felt that someone must take responsibility as customers suffered damages and employees were disciplined due to the private equity fund incident,” adding, “It is right to bring change to the organization through generational replacement, and excellent juniors have emerged as next chairman candidates, so the timing is appropriate.” Although he emphasized that he stepped down voluntarily, rumors of 'external pressure' are spreading in the financial sector.
First, there is the theory of political external pressure. A financial sector insider familiar with Shinhan Financial Group’s affairs said, “It is incomprehensible that someone who had recently openly considered establishing a vice chairman position and had the will for organizational restructuring after reappointment suddenly steps down,” adding, “Given the strong opposition from the political circles against a third term for financial holding company chairmen, it is hard to dismiss the influence of the government.”
There are also voices suggesting the influence of Zainichi Korean shareholders. They reportedly chose President Jin, who is a ‘Japan expert’ with over ten years of experience working in Japan, including as head of the Osaka branch and SBJ Bank, instead of Chairman Cho, who has almost no experience in Japan. As of the third quarter of this year, Shinhan Financial’s major shareholders are the National Pension Service (8.22%), BlackRock (5.67%), and the employee stock ownership association (5.07%), but traditionally, Zainichi Korean shareholders have held strong influence. Although they individually hold shares, they have exercised shareholder rights collectively during important decision-making, exerting considerable influence. Unofficially, the Zainichi Korean shareholding ratio is known to be around 15-19%. Their influence is so strong that four out of twelve outside directors are of Zainichi Korean origin.
With President Jin’s appointment, the likelihood of other financial company heads being replaced one after another has increased. Currently, the selection of the next chairmen for NH Nonghyup Financial and BNK Financial Group is underway. The current chairman of NH Nonghyup Financial, Son Byung-hwan, whose term expires at the end of this month, has already been excluded from the next chairman candidates. It is also rumored that Son Tae-seung, chairman of Woori Financial Group, whose term ends in March next year, is contemplating whether to challenge for an additional term. Chairman Cho mentioned the Lime private equity fund incident as the reason for his resignation, and Chairman Son also received a heavy disciplinary action for the same issue. BNK Financial Group, whose chairman Kim Ji-wan resigned last month, is scheduled to finalize the first round of next chairman candidates on the 13th.
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