Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Financial groups on alert over NPS' rising clout
By Kim Bo-eun
By Kim Bo-eun
Financial groups have become increasingly cautious over legal risks associated with shareholders, as the National Pension Service (NPS), which serves as the groups' largest shareholder, has pledged to take more aggressive action against damage to corporate value.
The NPS' management committee stated on Dec. 27 it would play a greater shareholder role, going as far as calling for board members' dismissal when the companies it invests in are suspected of engaging in practices that harm the company's value. A set of guidelines on shareholder activism were approved.
It said shareholders can require companies to take action based on lower court rulings regarding alleged irregularities, and not the top court's ruling, as trials damage the company's reputation in the same way.
As of December, the NPS was the largest shareholder of 19 listed firms. The NPS is the largest shareholder of five financial groups. The NPS has been increasing its shares of financial groups due to their high-dividend policy.
The NPS is the largest shareholder of Shinhan, Hana and KB financial groups, owning 9.95 percent, 9.68 percent and 9.55 percent each in shares. Among regional financial groups, it is the largest shareholder of DGB and BNK. The NPS became the largest shareholder of BNK last week. BNK group is embroiled in allegations involving dereliction of duty.
The NPS is also the second largest shareholder of Woori, after the Korea Deposit Insurance Corporation. Considering the government is planning to privatize Woori by selling the state-run institution's 18.3 percent stake, the NPS is set to become the largest shareholder of Woori as well.
This has put the groups on edge ahead of general shareholders' meeting due to take place in March, as many of the financial groups currently face legal risks.
Shinhan Group Chairman Cho Yong-byoung faces a lower court ruling on Jan. 22 over alleged irregularities in hiring employees. The prosecution sought a three year prison term and 5 million won in fines against Cho, for his alleged involvement in irregularities in recruiting when he was Shinhan Bank's CEO.
Woori and Hana, meanwhile, await sanctions imposed by financial authorities over the mis-selling of financial derivative options that caused huge losses for investors last year.
Woori Financial Group Chairman and Woori Bank CEO Son Tae-seung, as well as Hana Financial Group Vice Chairman Ham Young-joo and KEB Hana Bank CEO Ji Sung-kyoo face sanctions as figures leading the banks' management.
While the ruling has yet to be made and the sanctions yet to be imposed, for financial groups these issues are potential risks.
“After the set of guidelines on shareholder activism were approved last year, it has been the stance of investees that they have become more burdened,” an official of the Korea Corporate Governance Service said.
“However, investees should be thinking and preparing for the change, through looking into foreign case studies,” she said.