The long-delayed announcement of a financial governance reform plan is imminent. While the implementation of the reform will require time as it depends on the passage of related legislation in the National Assembly, it is expected to have an immediate impact starting with the election of chairs at KB Financial and iM Financial.
◇KB Financial narrows chair candidates to three on the 27th... iM Financial revises chair eligibility criteria = According to financial industry sources on the 26th, the KB Financial Chair Candidate Recommendation Committee (Chair Committee) will conduct first-round interviews with six potential candidates for the next chair on the 27th and then narrow the shortlist down to three. Following this, a second round of in-depth interviews will be held next month on the 11th, after which the final candidate will be determined through voting. With about three weeks remaining until the final candidate is selected, the next chair will be officially confirmed at the shareholders' meeting in November.
The current pool of candidates includes four internal nominees and two external ones, totaling six. Among the internal candidates are Yang Jong-hui (Chairman), along with Lee Jae-geun and Lee Chang-kwon, division heads at KB Financial, and Lee Hwan-joo, president of KB Kookmin Bank. The external candidates include former Woori Bank chairman Kwon Gwang-seok and one individual who requested anonymity. The Chair Committee has set the chair's eligibility criteria to include leadership, work experience, expertise, ethics, ability to ensure sound management in both short- and long-term perspectives, and alignment with KB Financial's vision and values.
In financial circles, it is widely believed that Yang (Chairman) has a high probability of reappointment given his record-breaking performance during his tenure, which solidified the position of "Leading Finance." KB Financial entered the "5 trillion won club" for the first time in its history in 2024 and recorded net profits of 5.843 trillion won last year, achieving over 5 trillion won in net profit for two consecutive years. In the first half of this year alone, it posted net profits of 3.8846 trillion won, setting a new record for semi-annual performance.
iM Financial, whose chair Choi Geun (Chairman)'s term expires in March next year, has begun preparations for the chair election by revising eligibility criteria. According to the revised criteria, candidates must have at least 20 years of work experience in domestic or foreign financial institutional investors and hold a position as chief executive officer or vice president or higher at a domestic or foreign financial institution within the past five years. The age requirement also stipulates that candidates must be under 67 years old at the time of appointment by the shareholders' meeting.
◇Governance reform plan primarily affects KB Financial = In financial circles, it was initially expected that KB Financial would be the first case to apply the government's governance reform plan. However, as the reform plan, which was anticipated to be announced at the beginning of the year, has been continuously delayed, applying it to KB Financial in a timely manner is becoming increasingly difficult. While some aspects of the government's reform plan can be implemented immediately, most measures require amendments to the Financial Governance Act. Even if the government announces its reform plan in early September, it would be practically impossible to apply it to KB Financial, which plans to finalize its final candidate on the 11th of next month.
Nevertheless, KB Financial will inevitably face pressure if it proceeds with its process while ignoring the government's reform plan. The financial authorities have previously indicated the direction of the governance reform and have urged voluntary adoption even before legislative amendments are completed.
KB Financial is also applying procedures that reflect issues pointed out by the financial authorities in the selection process for Lee Beon (Chairman). By advancing the management succession timeline by one month compared to previous years, it has extended the time available to verify candidates and provided sufficient internal data to allow external candidates to compete fairly. It also allocated approximately two months for interview preparation. In addition, KB Financial is documenting all procedures of the Chair Committee, including the selection process and rationale for the shortlist.
As a result, it is expected that measures to strengthen the voting procedures of the Chair Committee and shareholders' meeting in case of reappointment will be incorporated as much as possible. It is reported that KB Financial has already adopted the principle of unanimous decision-making when finalizing candidates at the Chair Committee.
Since iM Financial has not yet officially activated its Chair Committee, it is expected to establish procedures reflecting the governance reform plan as much as possible once it is announced.
in FINANCE
