Busan and Gyeongnam Bank Presidents Approaching Term End, Possibility of Renewal?

Bang Seongbin of Busan Bank
Achieved Some Results Just Before End of Term,
Such as Maintaining the Busan City Treasury and Collaborating with Internet Banks
Poor Performance Remains a Drawback
Ye Gyeongtak of Gyeongnam Bank Shows Strong Results,
But Faces Hurdles from Large-Scale Embezzlement Incident

Attention is focused on the possibility of reappointment for the bank presidents under BNK Financial Group whose terms expire this March. Busan Bank President Bang Seong-bin has achieved some results just before the end of his term, such as maintaining the Busan City treasury and collaborating with K Bank, but his poor performance is seen as a drawback. Gyeongnam Bank President Ye Gyeong-tak has good performance but faces a high risk of being hindered by a large-scale embezzlement incident. Since the system involves the holding company, not the banks, recommending candidates for bank presidents, the intentions of BNK Financial Group Chairman Bin Dae-in are expected to play a significant role.

According to the financial sector on the 29th, BNK Financial Group held the first meeting of the subsidiary CEO Candidate Recommendation Committee (Candidate Committee) at the end of last year and began the process of appointing CEO candidates for subsidiaries such as Busan Bank and Gyeongnam Bank.

President Bang is well-regarded in new business areas, having secured ‘home turf’ like the Busan City treasury and led collaboration with internet banks. In September last year, the Busan City Treasury Designation Review Committee selected Busan Bank as the primary treasury and KB Kookmin Bank as the secondary treasury. Despite tough competition from Kookmin Bank and IBK, Busan Bank won. His locally focused approach is also credited as decisive for the re-selection. Busan Bank received the highest rating in the ‘Financial Company Regional Reinvestment Evaluation’ conducted by the Financial Services Commission this year for the Busan region.

He also led the launch of a joint loan product with K Bank. On the 23rd, Busan Bank and K Bank signed a strategic marketing partnership agreement. This aligns with JB Financial Group’s banks (Jeonbuk and Gwangju) launching joint loan products with Kakao Bank and Toss Bank, respectively. President Bang said about this collaboration, “Based on strategic cooperation between internet-only banks and regional banks, we plan to continuously pursue new business model development and joint marketing.”

However, Busan Bank’s poor performance is regrettable. It was the only regional bank whose cumulative net income through the third quarter of last year declined compared to the previous year. As of the third quarter of last year, Busan Bank’s cumulative net income was 384.7 billion KRW, down 2.1% from 393 billion KRW the previous year. Although the impact of real estate project financing (PF) was a direct factor, criticism is expected as other banks faced similar conditions.

President Bang Seong-bin of Busan Bank (left in the photo) and President Ye Kyung-tak of Gyeongnam Bank (right in the photo).

In the case of President Ye, performance has been good since his inauguration. Gyeongnam Bank, which set a record high net profit of 257.1 billion KRW in 2023, his first year in office, also posted strong results in the third quarter of last year. The cumulative net income at that time was 290.8 billion KRW, a 21.6% increase from 239.2 billion KRW the previous year.

However, he is unlikely to be free from responsibility for internal controls due to a large-scale embezzlement incident. In 2023, a real estate PF loan embezzlement incident amounting to 298.8 billion KRW occurred. The incident period was from 2008 to 2022, unrelated to President Ye’s term, but Gyeongnam Bank was criticized for its delayed apology notification afterward. Due to this incident, Gyeongnam Bank was suspended from new real estate PF loan operations for six months by financial authorities. The bank also experienced internal turmoil. To manage the incident, it decided to reclaim performance bonuses from bank employees, which the labor union opposed. It is also regrettable that the bank showed a lukewarm attitude toward internal control prevention, such as not participating in the pilot operation of the accountability structure last year.

Their reappointment will likely depend on Chairman Bin’s intentions. In October 2023, BNK Financial Group established the Candidate Committee, increasing the group chairman’s authority. Specifically, until now, the affiliate executive candidate recommendation committees selected, reviewed, and recommended their own CEO candidates to the board. However, after establishing the Candidate Committee, the group committee changed the process to unilaterally recommend subsidiary CEO candidates to the affiliate committees. Currently, the Candidate Committee consists of four members: Chairman Bin, an inside director, and three outside directors.