The race to appoint the next chief executive officer (CEO) in the banking sector has officially begun. Small and medium-sized banks such as SC Jeil Bank and Sh Suhyup Bank have either completed or are in the process of completing related procedures, and major commercial banks are expected to fully initiate CEO appointment procedures after the Chuseok holiday.
Meanwhile, the financial sector's attention is focused on Woori Financial Group and Woori Bank, which are struggling with the scandal involving improper loans to relatives of former Woori Bank Chairman Sohn Tae-seung. With the head of the supervisory authority directly increasing pressure by stating "someone must take responsibility," the issue of the positions of not only the bank president but also the chairman is gradually coming to the surface.
The prosecution conducted a search and seizure at the Woori Bank headquarters in Jung-gu, Seoul, on the 27th in connection with former Woori Financial Group Chairman Sohn Tae-seung's relatives' improper loans amounting to approximately 35 billion won. Photo by Kang Jin-hyung aymsdream@
According to the financial sector on the 9th, Sh Suhyup Bank will decide on the interview candidates for the next bank president on the 12th and conduct interviews on the 23rd, after the Chuseok holiday. So far, six candidates have thrown their hats in the ring at Suhyup Bank, including incumbent President Kang Shin-sook, Senior Vice President Shin Hak-gi, and Vice President Park Yang-su.
Some banks have already designated their next president early. SC Jeil Bank held an executive candidate recommendation committee meeting on the 6th and selected Lee Kwang-hee, head of the Corporate Finance Group (Vice President), as the next president. Lee will undergo board and shareholder meetings on the 27th and will serve a three-year term starting January 8 next year.
The five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) are expected to begin the appointment process after Chuseok. This is because, starting this year, according to the 'Best Practices for Bank Governance' introduced by financial authorities, the succession process must begin three months before the CEO's term expires. Most of the heads of the five major commercial banks will finish their terms at the end of December.
Currently, among the five major commercial bank presidents, KB Kookmin Bank President Lee Jae-geun is serving his second term, while Shinhan Bank President Jung Sang-hyuk, Hana Bank President Lee Seung-yeol, Woori Bank President Cho Byung-kyu, and NH Nonghyup Bank President Lee Seok-yong are serving their first terms. The financial sector believes that financial accidents and leadership changes will ultimately determine whether they are reappointed.
An industry insider said, "(The incumbent presidents) were affected by the Hang Seng China Enterprises Index (HSCEI)-based equity-linked securities (ELS) losses in Hong Kong, but overall their performance was good," adding, "Some presidents may be affected by changes in the leadership of the entire group, and some may not be able to escape the impact of successive financial accidents."
Among these, the place attracting particular attention recently is Woori Financial Group and Woori Bank. The aftermath of the Sohn Tae-seung improper loan scandal and delayed reporting issues is spreading widely. The authorities are also gradually increasing pressure. Financial Supervisory Service Governor Lee Bok-hyun hinted at former Chairman Lim Jong-ryong and mentioned the responsibility of the current management, recently stating, "The current management has no intention to improve," directly targeting Chairman Lim and President Cho. The supervisory authority has also decided to convert the upcoming special inspection early next month into a regular inspection.
Accordingly, the industry views the possibility of President Cho's reappointment as low. There is a high possibility that the issue could escalate to include Chairman Lim's position. Some believe that they may decide their positions in some way around the time of Chuseok.
However, there are also criticisms that this incident is being misrepresented. A representative from a commercial bank said, "The essence of the incident is former Chairman Sohn's improper loans, and the focus should be on punishing those involved, but the current atmosphere is that an externally appointed chairman with a long remaining term must take responsibility," adding, "It is questionable whether this matter is serious enough to warrant intervention from the presidential office."
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