Ahn Cheol-soo, a member of the National Assembly; Seo Kyung-bae, chairman of Amorepacific; the late Jung Moon-sool, former chairman of Mirae Industry; Nam Seung-woo, founder of Pulmuone; and Kim Ki-hong, chairman of JB Financial Group — all share one common thread. They all served as outside directors at KB Kookmin Bank, and they did so during the same period. This was the early board of Integrated Kookmin Bank, formed after the merger of the former Kookmin Bank and Hana Bank (formerly Woori Bank).
As their names suggest, the Kookmin Bank board at that time was not merely a rubber stamp; it took firm stances on key issues against both management and the government. The board met twice a month and convened as needed whenever urgent matters arose. Some outside directors even resigned voluntarily, citing concerns that the excessive time commitment interfered with their primary duties.
Even after KB Financial Group transitioned to a holding company structure, its board remained formidable. During Chairman Oh Yoon-dae's tenure, the board rejected the proposal to acquire ING Life, clashing directly with management. During the KB crisis, when Lim Yeong-rok (Chairman) faced disciplinary action from financial authorities including suspension of duties and subsequently filed an administrative lawsuit to resist removal, the board ultimately dismissed him from his chairmanship.
This time, instead of reappointing Yang Jong-hui (Chairman), who was widely expected to continue given the bank's record-breaking profits, industry-leading shareholder returns, and solid standing as a leading bank, the KB Financial Group board selected Lee Jae-geun, head of the banking division, as its next chairman candidate — sending shockwaves through the financial sector.
Though unexpected, the decision received generally favorable assessments from the financial community. A former financial executive who previously served as CEO described KB Financial Group's move as a "pleasant surprise." The use of the adjective "pleasant" likely reflects the fact that the board delivered a decisive blow to the government and financial authorities, which had long criticized financial governance structures as being dominated by a "corrupt inner circle." Although more than half of the outside directors were appointed during Yang (Chairman)'s term, the government and political circles found themselves embarrassed when even reappointment was denied, let alone a third consecutive term — a move that sparked debate over whether such a restriction should be codified into law.
The selection of KB Financial Group's Lee Beon (Chairman) will undoubtedly stand as a fresh precedent in the history of financial governance and will be referenced every time a new chairman is appointed. In the past, CEOs who failed to secure reappointment were typically those who had faced disciplinary actions from financial authorities or whose successors had already been pre-selected with backing from powerful political figures. While financial CEOs have long feared falling out of favor with either the ruling administration or financial regulators, KB Financial Group demonstrated that even alignment with the government does not guarantee reappointment. It also sent a clear message that record-breaking performance alone is not sufficient for a CEO to retain their position.
The decision has also introduced new challenges. Historically, financial CEOs often focused on consolidating their organizations during their first term and pursued new changes and challenges upon seeking reappointment. Now, however, they must prove themselves from the very beginning of their tenure. There is concern that a CEO under pressure may make hasty managerial decisions, such as overly aggressive M&A activities. Indeed, KB Financial Group's history includes an instance where a CEO pursued reckless overseas M&A deals, resulting in massive losses. Additionally, there is a risk that a CEO might become reluctant to identify and nurture potential successors who could become competitors just three years down the line.
Most importantly, the financial sector is now questioning what kind of board can replace a CEO who has delivered record-breaking performance with a single phrase — "generational change." Until now, discussions on financial governance have centered on "checking Je Wang-jeok (Chairman)." Consequently, the independence of the board in fairly and transparently selecting and overseeing the chairman has been a central issue. Yet paradoxically, as the board's authority grows, there arises an incentive for CEOs to grow closer to the board in order to secure reappointment. Already, voices are emerging in the financial community asking whether one must now align oneself with the board. How can outside directors remain objectively evaluative? And how should directors take responsibility for their own decisions?
Although KB Financial Group's board selected Lee Jae-geun as "the right person to lead bold changes and strengthen KB Financial Group's core competitiveness while securing future growth drivers," it remains unclear how the board will take responsibility for its decision just three years ago, when it chose Yang Jong-hee as "the right person to successfully create a new future and sustainable growth for KB Financial Group."
in OPINION