By Oh Young-jin
Assistant managing editor
Perhaps, Euh Yoon-dae is about to land the wrong job at the wrong time.
Not that he had coveted the job as the governor of the Bank of Korea and didn't get it.
Rather, it is because he appears to be uncertain as to why he has been nominated as the chairman of KB Financial, to which KB Bank, the leading bank with the total assets of 259 trillion won, belongs.
Reach the conclusion first and it would be up to Euh to make the job he is about to take the right one for him. For that, his agenda should be to straighten out his priorities' list.
Let's first consider the least important factors at stake.
It is public knowledge that Euh is a close friend of President Lee Myung-bak and his nomination is greatly due to that relationship. Both are alumni of Korea University. Under President Lee, Euh served as head of a blue-ribbon committee in charge of enhancing Korea's national brand power.
Despite this, his nomination triggered little criticism about cronyism. Part of that silence in the chatterbox of the financial community is in no small part thanks to his qualifications.
As president of Korea University, Euh played a key role in making the private school as competitive as its cross-town rival Yonsei University.
Unfortunately, he did fall victim to his own success, his try at a second term was thwarted in a palace coup of sorts led by his fellow professors, who were dissatisfied with his progressive drive.
As the national brand manager, the job he held until his KB nomination, the 65-year-old had maintained his characteristic streak of innovation, preaching about the necessity of reform in a way that helped take away the edge from the Bush-like friend-or-foe governance style of the incumbent government.
Thus, when he was most talked about for possibly becoming the next central bank head ahead of Lee Seong-tae's departure at the end of April, few appeared to raise objections on the grounds of his ties with the President. Of course, the lack of such criticism is also attributable to a higher level of transparency that the banking industry has acquired since the currency crisis in the late 1990s. Although President Lee's political agenda proves to be anachronistic sometimes, it is unthinkable now for the government to have the same level control as it did in its development-dictatorships started by Park Chung-hee and ending with the Kim Yong-sam presidency.
Now we all know that Euh didn't get the job at the central bank. The level of regret he feels was best expressed by him when he recently talked to reporters about how he would have better performed as the BOK governor than the current holder of the job, Kim Choong-soo.
According to financial industry watchers, Kim has so far acted as if he believed that the role of the BOK governor is subordinate to the finance minister. Maybe, he will someday grow to meet his job requirements of providing a healthy dose of checks and balances from a monetary perspective to the government.
Thus, Euh should find himself in a position from which he can push ahead with whatever mission he is assigned to but, by most appearances, he is just backpedaling.
After he was nominated, he talked ambitiously about taking over Woori Financial, the biggest by total assets, which has been under government control since the currency crisis. Privatizing state-controlled banks was a key campaign pledge of President Lee. Then, taking the flak for it, Euh talked to The Korea Times about his new priority being KB restructuring.
During his recent interview with Bloomberg, a U.S. financial news provider, Euh's ambition was reduced to small talk. His new priorities are now about raising KB's competitiveness, vowing not to press for the Woori merger for the next two years.
It is possible that Euh is making a tactical move aimed at reducing a chance for confrontation in the lead-up to the July 13 shareholders meeting where he is expected to be confirmed for the job.
Unions of both banks are up in arms, well aware of the restructuring that would follow such a merger, while executives may feel uneasy about their job security, all contributing to a hard landing on his new job. Everybody is ready to blame him for KB's falling share prices.
But it is time for Euh to remind himself of his original priorities.
If he believes he was solely chosen to normalize the KB operations and enhance its price to book ratio (PBR) for a higher corporate value, he is sorely mistaken.
If he thinks he can get away with a fat paycheck from the job by settling just for a more competitive KB, he is utterly misunderstanding the bigger picture. First there are other better candidates for that job. Secondly, he can't avoid criticism of cronyism for getting a plum job thanks to his ties to President Lee. Overall, if he does what he is now saying he plans to do, his KB appointment would be an unmistakable case of cronyism.
Euh's original priority is to rearrange the nation's banking industry. As he initially said, this should start with Woori privatization. It is well known that Woori has been under government control for far too long with its potential being compromised, being excluded from the level of competition that is common in the private sector.
Then, the KB-Woori combination means the birth of a megabank to the scale that has never been seen before in Korea.
Admittedly, even top bureaucrats are having second thoughts about the wisdom of a big bank, faithfully following reflections in officialdom in the United States as the result of the Wall Street meltdown. The Obama-led Democrats have their reason to create more controls over the big banks that were pushed to the brink of collapse for their duplicitous derivative deals. After all, they had to keep them on life support at the huge tab to taxpayers.
However, accepting the U.S. example at face value would be a mistake for us. For all its flaws and faults, Korea's banking sector has never reached the point of a learning curve the U.S. banks did before the subprime crisis. In other words, the Korean banks have a lot more to learn from the failed U.S. business model to grow further in proportion to the nation's overall economic potential.
I believe that President Lee's reported ruefulness about the lack of big banks which are capable of financing big overseas projects after Korea won a mega nuclear power plant deal with the United Arab Emirates is still valid. Since maintaining the status quo is not an option, a megabank might be the only remaining option. That is where Euh should step in.
If Euh is still unconvinced, here is one statement that can help realize what his mission is all about.
"Euh's reform drive is as dead as alive," one banking executive said. "He has to do his job for the first six months but he has used half of it even before he takes office."