[In a Tight Spot with Im Jong-ryong's Administration]④ 'Outstanding Bureaucrat' CEO Came, but No Improvement in Organizational Culture

Under Lim Jong-ryong's leadership, Yonsei University alumni network stands out... Commercial bank veterans also occupy key positions
Regarding Son Tae-seung's delayed report on improper loans... Some see the 'Son line from Hanil Bank' still influential
Lee Bok-hyun: "The new chairman and president system repeats past bad practices"

Former Financial Services Commission Chairman and NH Nonghyup Financial Group Chairman Lim Jong-ryong, an outstanding financial bureaucrat who excellently served as chairman of NH Nonghyup Financial Group, has been CEO of Woori Financial Group for over a year now, but evaluations suggest there are no signs of significant changes in the organizational culture within Woori Financial Group and Woori Bank. Despite entering a period of system stabilization, incidents such as an embezzlement case involving approximately 18 billion KRW and allegations of delayed reporting related to improper loans involving relatives of former Chairman Sohn Tae-seung continue to surface.

Within the financial sector, while Lim receives high marks for his achievements during his tenure as Financial Services Commission Chairman and NH Nonghyup Financial Group Chairman, as well as for portfolio expansion since becoming Woori Financial Group Chairman, there is skepticism about whether he can change the organizational culture of Woori Financial Group and Woori Bank. This skepticism arises from concerns that certain academic and personal networks are emerging as new mainstreams, repeating old customs, and that a one-man dominant system is being reinforced.

Advancement of Yonsei University Alumni... Commercial Bank Also Gains Influence

"Lim Jong-ryong is a capable person." This is the testimony of a former vice minister-level official who worked alongside Chairman Lim for decades in the bureaucracy. Having served as the 3rd Chairman of NH Nonghyup Financial Group and the 5th Chairman of the Financial Services Commission, he is a heavyweight who has achieved significant results both in the financial sector and government. Given his role as a midwife in the privatization of Woori Bank, his ties with Woori Financial Group run deep.

The reason the Woori Financial Group Executive Candidate Recommendation Committee recalled him was for 'organizational culture innovation.' Following the overseas interest rate-linked derivative-linked securities (DLF) scandal and a 7 billion KRW embezzlement incident, Woori Financial Group urgently needed organizational culture improvement. The committee explained the recommendation background as, "For bold organizational innovation, it was judged that a person who can objectively diagnose the organization and proactively lead reform is suitable."

However, from the early days of Chairman Lim's tenure, evaluations of organizational culture innovation began to fade as personnel from specific academic backgrounds started to advance. Looking at the personnel changes made after Lim's inauguration last year, among the nine major holding company division heads, four were Yonsei University alumni. Yonsei University is Chairman Lim's alma mater. Including Chairman Lim, half of the ten major holding company posts were filled by individuals from a specific school.

The only retained executive vice president in charge of finance, Lee Sung-wook, is also a Yonsei University business administration graduate, and Lee Hae-kwang, appointed as head of the management support division?a key position?is also a Yonsei University alumnus. He graduated from the same economics department as Chairman Lim and reportedly served as chief secretary during Lim's chairman nominee period. Brand division head Vice President Jang Kwang-ik, an external recruit, is also a Yonsei University economics graduate and a direct junior. Kim Gun-ho, promoted to head of the future business promotion division, is another Yonsei University alumnus (former head of the synergy promotion division). Additionally, evaluations suggest that academic and personal networks have considerable influence in subsidiary CEO appointments.

After continued whistleblowing and criticism regarding personnel centered on specific academic and regional backgrounds, Woori Financial Group is evaluated to have diversified personnel appointments in the latter half of last year and early this year.

Personnel from commercial banks are also gaining prominence under Chairman Lim's administration. Looking at Woori Bank, the largest affiliate of Woori Financial Group, key division heads such as President Cho Byung-kyu, Corporate Investment Finance Division, Domestic Sales Division, and Treasury Market Division are all from commercial banks. Considering that during former Chairman Sohn's administration, personnel from Hanil Bank were favored, it appears that commercial bank personnel are beginning to gain influence.

Chairman Lim's one-man dominant system also seems to have solidified. For example, President Cho is excluded from the Woori Financial Group board of directors. Although he is CEO of Woori Financial Group's largest affiliate, he has not been able to step into the top leadership. This contrasts with most other financial holding companies where the bank president, as the largest affiliate, participates in board activities as a non-executive director. In personnel appointments earlier this year, a former executive who was severely disciplined for a derivative loss incident amounting to 100 billion KRW was appointed as a subsidiary CEO.

The problem is that this formation of a new lineage and the one-man dominant system could further worsen the existing organizational culture mentioned earlier. A source familiar with Woori Financial Group's affairs pointed out, "While Chairman Lim's past achievements and leadership are excellent, from the perspective of Woori Financial Group, which has experienced external shocks for over a decade, it is a passing breeze. Even if new networks are formed, the new chairman system will not last forever, so rather than replacing the existing organizational culture, it is more likely to complicate the tangled web of connections and personal networks."

Delayed Reporting of Improper Loans... View That Sohn Tae-seung Faction Remains Strong

As the organizational culture of Woori Financial Group and Woori Bank remains unchanged under the new chairman system, existing behaviors are being repeated. There is also a view that the faction of former Chairman Sohn, who is from Hanil Bank, remains strong.

In the organization, personnel and finance are core, and Lee Hae-kwang, head of management support division responsible for personnel at Woori Financial Group, and Lee Sung-wook, head of finance division, are both from Hanil Bank and are considered part of former Chairman Sohn's faction. Both are also alumni of Yonsei University's business school. Lee Myung-soo, vice president of the HR group responsible for personnel at Woori Bank, is also from Hanil Bank.

After the recent disclosure of an embezzlement incident involving approximately 18 billion KRW by a deputy-level employee, Park Gu-jin, then compliance officer (vice president) of Woori Bank, resigned taking responsibility for the incident but soon moved to the IT group's IT Solution ACT. This contrasts with the compliance officers of BNK Financial Group and Gyeongnam Bank, who resigned after large-scale embezzlement incidents last year and were transferred to subsidiary executive positions. Lee Hae-kwang, responsible for holding company personnel, Lee Myung-soo, responsible for bank personnel, and former compliance officer Park Gu-jin are all known to be alumni of Busan Daedong High School. Park, the former compliance officer, is also from Hanil Bank.

The same applies to the recent improper loan scandal involving former Chairman Sohn, which has been heating up the financial sector. Although most of the loans occurred during the previous chairman's tenure, Woori Bank's response has been questionable. According to supervisory authorities, bank management confirmed the full details of the incident around September to October last year, and holding company management did so around March this year, but they neither reported it nor took more than retrospective internal audits and disciplinary actions. There was no board report either. Rumors about this incident had been widespread within the company and even the board for years, but the current management also tacitly allowed it.

A Woori Bank insider said, "Weak sales-related positions are held by commercial bank personnel, while key positions such as personnel and finance are occupied by Hanil Bank alumni who were prominent during former Chairman Sohn's time. The reason the improper loan scandal involving Sohn's relatives was not reported to the board or supervisory authorities and was swept under the rug is probably because Sohn Tae-seung's Hanil Bank faction remains strong."

Supervisory authorities, faced with this situation, have criticized Chairman Lim's administration in relatively strong terms. They have also launched additional inspections related to delayed reporting by the current management. Lee Bok-hyun, Governor of the Financial Supervisory Service, recently stated in a broadcast appearance, "More than a year has passed under the new holding company chairman and new bank president system, but the way the incident has been handled repeats the old bad practices. Therefore, rather than viewing it with trust, I believe it is necessary to investigate the truth on the premise that something might be concealed."