KB Financial Group, Korea’s largest financial group with total assets of 830 trillion won, has opted for change. Lee Jae-geun, head of the KB Financial Holdings division, was unexpectedly appointed as the final candidate for the next chairman. This decision significantly deviated from expectations in the financial sector, which had anticipated the reappointment of the current Yang Jong-hui (Chairman). In the financial industry, it is interpreted that the independent judgment of the KB Financial Board played a decisive role. Amid ongoing controversies over corporate governance at financial institutions throughout the year, board members are seen as having made a bold decision not to rest on their strong performance but to move forward with new leadership.
The KB Financial Holdings Chairman Candidate Recommendation Committee announced on the 11th that it selected Lee Jae-geun, head of the KB Financial Holdings division, as the final candidate for the next chairman. The designated Lee Jae-geun will assume the chairmanship after receiving approval from the KB Financial regular shareholders' meeting and board in November. His term will last until November 2029.
This decision is widely regarded as an unexpected development that surpassed market expectations. In the financial sector, many evaluations suggested that reappointment of Yang Jong-hui (Chairman) was highly likely, considering his performance during his tenure, including profit growth and shareholder returns. Even financial authorities appeared to express surprise, with reports indicating they "had not anticipated this at all."
The background for the recommendation committee's selection of this division head as the next chairman candidate is identified as generational change. Cho Hwa-jun, chair of the recommendation committee, stated, "At a time when bold changes and generational transition are necessary to strengthen the group’s fundamental competitiveness and secure future growth drivers beyond merely resting on current outstanding achievements, we selected Division Head Lee Jae-geun as the most suitable leader for this mission."
Although Yang (Chairman) achieved excellent results during his tenure, the decision is interpreted as a move to avoid complacency and pursue a 'quantum leap' through change. In fact, KB Financial entered the '5 trillion won club' for net profit for the first time in its history as a financial holding company in 2024, the year after Yang (Chairman) took office, and achieved net profits of 5.843 trillion won last year, solidifying its position as a 'leading financial institution.' In the first half of this year, KB Financial also recorded its highest-ever semi-annual performance with net profits of 3.8846 trillion won, representing a 13.1% increase compared to the same period last year. Its proactive shareholder return policy, including achieving a shareholder return rate of 52% last year, also received high praise.
Division Head Lee Jae-geun was born in 1966, making him five years younger than Yang (Chairman), who was born in 1961. If Yang (Chairman) were to be reappointed, his term would extend until 2029; however, by selecting this division head, KB Financial has achieved a generational transition at the CEO level.
This division head is recognized as a seasoned banker who served as president of KB Kookmin Bank from 2022 to 2024 and has held key management roles including head of financial planning and CFO at KB Financial Holdings. This contrasts with Yang (Chairman), who did not experience the role of bank president but instead rose through non-banking divisions such as KBSon Hae-bo-heom (CEO).
Jo (Chairman) stated, "Division Head Lee Jae-geun possesses outstanding expertise across both banking and non-banking sectors, along with deep insight into finance, strategy, and global operations. His performance and management capabilities demonstrated during his tenures as bank president and division head of the holding company are more than sufficient for him to become the group's leader."
In the financial sector, it is evaluated that the independent judgment of the KB Financial Chairman Candidate Recommendation Committee led to the unexpected selection of this individual as the final candidate. Although controversies over "board trench warfare" centered around financial authorities arose, ultimately there was no advantage for the incumbent.
Currently, the KB Financial Chairman Candidate Recommendation Committee consists of seven outside directors: Jo Hwa-jun (Chairman), Choi Jae-hong, Cha Eun-young, Lee Myeong-hwal, Kim Sung-yong, Kim Seon-yeop, and Seo Jeong-ho. Among them, four (Cha Eun-young, Lee Myeong-hwal, Kim Seon-yeop, and Seo Jeong-ho) joined after Yang (Chairman) took office. This indicates that a majority of outside directors made independent judgments separate from their appointers.
Meanwhile, this division head has taken on challenging tasks including further solidifying KB Financial's position as a 'leading financial institution,' redesigning wealth management (WM) to respond to AX (AI transformation) and Money Move, and strengthening global operations.
With the acceleration of 'Money Move' driven by a booming stock market, banks find it increasingly difficult to maintain past glories, necessitating an accelerated shift in business models. The rapid advancement of AI technology and changes in financial paradigms have pushed traditional growth strategies for bank-based financial holding companies to their limits, making a transformation of business models urgently necessary.
Strengthening global operations is also a key challenge assigned to this division head. KB Financial has long been criticized for its weak global performance compared to its solid domestic operations, which has been identified as an Achilles' heel. In particular, while competitor Shinhan Financial became the first financial institution in Korea to exceed 1 trillion won in pre-tax global profits last year and expand its global footprint, KB Financial has struggled without fully achieving the normalization of KB Bank Indonesia (Bank Bukopin).
A KB Financial official stated, "As other banks are rushing to strengthen their non-banking portfolios, KB Financial must leverage its already well-established portfolio to widen the gap with competitors." The official added, "Achieving global performance commensurate with KB Financial's stature and providing comprehensive asset management solutions aligned with capital market trends remain key challenges."
in FINANCE
