Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Why do foreign banks let CEOs serve multiple terms?
Standard Chartered (SC) Bank Korea CEO Park Jong-bok, left, and Citibank Korea CEO Yoo Myung-soon / Courtesy of SC Bank Korea and Citibank Korea
By Lee Yeon-woo
While financial authorities are advocating for governance reforms and voicing concerns about the prolonged tenure of CEOs in the financial sector, foreign banks seem to be sidestepping these pressures.
Last Friday, Standard Chartered (SC) Bank Korea's executive candidate recommendation committee selected Park Jong-bok as the sole finalist for the bank’s next CEO. Park was first appointed in 2015 and has since led the bank for nine consecutive years. If confirmed for a new term, his tenure will extend until January 2025.
"Since being appointed in 2015, Park transitioned the bank into profitability by 2016 and has consistently improved its financial performance with strategies tailored to the Korean market," the committee said in its statement. They highlighted that as of 2022, the bank's return on equity (ROE) reached 11.5 percent. In contrast, the average ROE for domestic commercial banks is 5.2 percent.
Citibank Korea CEO Yoo Myung-soon is also poised to start her second consecutive term, pending approval at a shareholders' meeting scheduled for Oct. 27. If confirmed, her tenure will extend through 2026.
The executive candidate recommendation committee spoke highly of Yoo's instrumental role in overhauling the bank's profit model. "Yoo has been pivotal in incrementally shutting down the bank's consumer credit operations in Korea, and channeling efforts into corporate financing," they said. "We're witnessing significant improvements in our key financial metrics this year."
An official from the banking industry explained, "Unlike CEOs of domestic financial companies, foreign bank CEOs usually have their reappointment assured, unless there is a clear reason for disqualification. This is especially the case if they've demonstrated a strong performance during their tenure."
It is also believed that financial authorities struggle to intervene, either directly or indirectly, in the governance of foreign banks, primarily because their headquarters are situated outside of Korea.
Under the Yoon Suk Yeol government, financial authorities are intensifying their scrutiny over the multiple tenures of leaders within domestic financial groups. Chairmen of major financial groups, including Woori, Shinhan, NH Nonghyup and KB, have all indicated their intention to resign before the end of their terms.
KB Financial Group Chairman Yoon Jong-kyoo, who bid farewell after nine years, also expressed disappointment with the policy direction. In a press conference last month, Yoon pointed out that the average tenure of CEOs at S&P 500 companies is 10.2 years, and posed the question, "Is it truly feasible to engage in and reap the benefits of long-term investments when there's a CEO turnover every three to six years?"