KB Financial chairman in spotlight as first test of governance reform

Financial Services Commission (FSC) Vice Chairman Kwon Dae-young speaks during a meeting of the task force on financial group governance reform at Government Complex Seoul, Friday. Courtesy of FSC

By Jun Ji-hye

• Published Jan 16, 2026 3:16 PM KST

Financial groups on edge as authorities sharpen focus on leadership selection processes

Tensions within the financial industry are mounting as authorities step up pressure by launching a corporate governance task force and signaling tough on-site inspections aimed at curbing the long-standing practice of financial holding company chairmen securing reappointments, industry sources said Friday.

Market attention is particularly focused on KB Financial Group, where Chairman Yang Jong-hee’s term expires in November. While most financial holding companies wrapped up their leadership succession processes recently, KB was the exception, raising the possibility that it could become an early test case for the application of new governance guidelines once the authorities finalize their reform measures.

The Financial Services Commission (FSC), the country’s top financial regulator, convened the inaugural meeting of its task force on financial group governance reform, bringing together officials from the Financial Supervisory Service (FSS) as well as experts from research institutions, academia and the legal community.

The initiative followed President Lee Jae Myung’s criticism that a “corrupt inner circle” has taken root in the financial sector, allowing a small group to perpetuate its control.

The task force will examine ways to bolster board independence, enhance the fairness and transparency of CEO selection processes and improve the structure of performance-based compensation systems. It aims to finalize a set of governance reform proposals by March, while pursuing amendments to the Act on Corporate Governance of Financial Companies where legislative changes are required.

“Financial institutions must uphold a strong sense of public responsibility and operate under fair and transparent governance frameworks. Instead, the sector continues to grapple with recurring problems stemming from closed governance structures and instability,” said FSC Vice Chairman Kwon Dae-young, who chaired the meeting.

“Bank holding companies in particular have drawn sustained criticism over opaque and entrenched practices in the appointment and reappointment of chairmen. By settling into a carve-up style of governance, firms have also clung to outdated, interest margin-driven business practices, falling well short of public and societal expectations,” he added.

Separately from the task force discussions, the FSS will conduct on-site inspections of eight major financial holding companies — KB, Shinhan, Hana, Woori, NH NongHyup, iM, BNK and JB — next week. The review will go beyond routine examinations, placing particular emphasis on corporate governance practices.

Inspectors will focus on whether boards have relinquished their vetting role in CEO appointments, whether key committees merely rubber-stamp major decisions and whether the oversight and monitoring functions of outside directors have been weakened.

The findings are expected to be reflected in the task force’s forthcoming governance reform package, with measures such as limits on extended consecutive tenures under consideration.

However, the prevailing view is that the outcomes of the task force and inspections will be difficult to fully incorporate into the March shareholders’ meetings of major groups such as Shinhan and Woori, which have already made significant progress in their succession planning, including decisions on chairman reappointments.

“Even if related bills are introduced later this month, there would be insufficient time for them to clear the National Assembly’s committees before reaching a plenary vote,” a financial sector insider said. “As a result, KB Financial Group’s leadership succession, with Chairman Yang’s term expiring in November, could become the first real test of the finalized corporate governance guidelines.”