Chairman Lee Chan-jin met with the CEOs of eight major financial holding companies and urged them to strengthen the fairness and transparency of succession procedures for chief executives (CEOs) of their subsidiaries. With appointments of over 70 subsidiary CEOs, including bank presidents, scheduled for the second half of this year, he emphasized that the Holding Company Subsidiary Director Nomination Committee must ensure the substantive role of the Subsidiary Executive Candidate Recommendation Committee is guaranteed.
The Chairman met with the heads of financial holding companies and the President of the Bankers Association at the Financial Supervisory Service in Yeouido, Seoul, on the morning of the 23rd to discuss current issues in the financial sector and future directions. The meeting included CEOs of eight major financial holding companies: Yang Jong-hee of KB Financial Group, Jin Ok-dong Shin Han-geum-yung (Chairman), Ham Young-joo Ha Na-geum-yung (Chairman), and Im Jong-yong Woo Ri-geum-yung (Chairman).
The Chairman assessed the second half of this year as a "period of change," noting that externally, global monetary policy is shifting, increasing volatility in financial markets, while internally, succession procedures for over 70 subsidiary CEOs, including bank presidents, are underway.
The Chairman stated, "This second half of the year, when succession procedures for many CEOs under bank holding companies begin, presents a good opportunity to demonstrate that our past concerns and efforts have not been in vain." He added, "Holding companies that have yet to establish basic and core procedures, such as specific qualification requirements for CEOs and minimum verification periods at each evaluation stage, are requested to promptly address any deficiencies before initiating the appointment process."
He further said, "The Holding Company Subsidiary Director Nomination Committee must ensure that the Subsidiary Executive Candidate Recommendation Committee can fully perform its substantive role in accordance with the intent of Article 17 of the Financial Company Governance Act during the recommendation and selection process for CEO candidates." Proposals included providing sufficient information to the committee, such as a standing pool of CEO candidates, and reflecting the opinions of committee members during the candidate evaluation process.
He also urged fair competition in the selection process for local government depository banks. This concern arises from fears that if banks with superior capital strength are selected as winners through competitive bidding on cooperative project funds, it could be perceived as unfair competition. In response, the Chairman stated, "Please approach the operation of Local Government depository accounts not solely from a cost-benefit perspective, but also consider national challenges such as local fund circulation and balanced regional development."
The Financial Supervisory Service plans to examine whether banks have sufficiently analyzed the impact of cooperative project expenditures on soundness and profitability in the future.
He also demanded strengthened internal controls to prevent financial incidents. Financial accidents in the banking sector increased from 33 cases totaling 696.9 billion won in 2023 to 47 cases totaling 170.82 billion won in January through July of this year. It is judged that recent incidents include fraud by outsiders using forged income and employment certificates, inflated collateral valuations, and false sales contracts, as well as accidents at overseas branches. The Financial Supervisory Service plans to inspect fundamental issues such as the appropriateness of evaluation and compensation systems and organizational incentives if violations occur.
The banking sector also expressed agreement on CEO succession and internal control improvements. Ji Ju (Chairman)s stated they would review whether there are any deficiencies or areas for improvement in the subsidiary CEO appointment process and pledged to allocate sufficient personnel and resources to strengthen internal controls.
Jo Yong-beom, President of the Bankers Association, said, "We share the view that the CEO appointment process must be conducted transparently and fairly, ensuring responsibility for the soundness of financial institutions, internal controls, and consumer protection." He added, "In line with the status of bank holding companies, we will cooperate in promoting balanced regional development, improving corporate governance, and strengthening internal controls."
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