Industry officials said that the CEO appointments made by major financial groups at their subsidiaries at the end of the year are typically seen as prioritizing continuity rather than making significant changes. This is despite the fact that these organizations have undergone extensive organizational restructuring, including the establishment and growth of teams dedicated to enhancing financial productivity in line with the government's financial transformation initiative led by Lee Jae Myung.
Financial regulators are worried about long-standing practices in selecting chairmen and CEOs of financial holding groups. They are getting ready to establish a task force to improve corporate governance more extensively, which is causing tensions within the financial industry.
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The four main financial institutions - KB, Shinhan, Hana, and Woori - collectively have 52 subsidiary CEOs. Out of these, 28 are expected to have their terms end by the end of the year, indicating that over half will need to be renewed or replaced. KB, Shinhan, and Hana Financial Group have finished appointing CEOs for their subsidiaries. Out of the 18 executives under evaluation, only five were replaced, with the other 13 being kept in their positions.
Woori Financial Group still needs to make final decisions regarding its 10 subsidiary CEOs. KB Financial Group has made the decision to replace the heads of two of its seven subsidiaries, specifically the investment banking unit of KB Securities and KB Savings Bank. Despite this change, the CEOs of other subsidiaries such as KB Securities, KB Insurance, and KB Asset Management will continue in their roles.
The reshuffle is described as aiming for minimal change while ensuring stability across the board.
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Hana Financial Group decided to replace only one CEO among its seven subsidiary companies, specifically at Hana F&I. The other six CEOs, such as those leading Hana Securities and Hana Life, were reappointed for an additional year. Shinhan Financial Group took a comparable approach by replacing two out of four executives at Shinhan Life and Shinhan Asset Management, while also extending the terms of the CEOs at Shinhan EZ Insurance and Shinhan Asset Trust by one year.
Furthermore, Hana Financial Group Chairman Ham Young-joo has already begun a new term, and Shinhan Financial Group Chairman Jin Ok-dong and Woori Financial Group Chairman Yim Jong-yong are scheduled to be officially reappointed in March of next year. This month, corporate governance has become the main focus in the financial sector, with the Financial Supervisory Service (FSS) closely examining the governance of financial holding groups.
Since assuming office in August, FSS Governor Lee Chan-jin has consistently expressed worries about the accumulation of power resulting from long-serving CEOs of financial holding companies and banks. The discussion on this issue intensified following President Lee Jae Myung's public condemnation of the practice of repeatedly extending chairmen's terms, referring to it as a "corrupt inner circle." This led financial authorities to enhance their efforts in reforming governance practices.
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In the near future, the FSS plans to create a task force focused on corporate governance reform and will hold its first meeting. The discussions will address various topics such as fairness in choosing executives, the independence of the board, directors nominated by shareholders, eligibility criteria for CEOs, and enhanced accountability for holding companies in monitoring internal controls at their subsidiaries.