Klane Appeals Against Regulatory Move on Boardroom

By Cho Jin-seo

Staff Reporter

Larry Klane, CEO of Korea Exchange Bank (KEB), has sent letters to several lawmakers to appeal against the government's reform drive on the bank's boardroom structure, multiple sources said.

In the letter to the members of the National Policy Committee of the National Assembly, Klane said that a tighter regulation on the corporate governance structure could make the sale of KEB shares more difficult.

The lawmakers and financial regulators have been working together this year on the revision to regulations in the banking sector. The part Klane is objecting to is the number of outside directors in the boardroom, they said. Currently, banks, as well as other financial firms, need to have at least three outside directors on their board of directors, and the number should be equal to or more than half of the total board members. But under the bill, which was recently approved by the committee, banks must have more outside (non-executive) directors than inside (executive) directors.

``It seems that the bank has sent the letter to as many lawmakers in the committee as they can,'' said an aide of a lawmaker who received the letter. ``The letter made some points about the disadvantages of the new boardroom structure. But I don't think some of those raised were unreasonable."

Lone Star Funds, an American private equity fund, has a controlling stake in KEB. The fund has been preparing an exit from its KEB investment, sending invitation letters to a number of domestic and foreign financial institutions and investors for bidding. The deal is expected to fetch around $4 billion.

The bidding has reportedly not been very popular especially among domestic banks and none have publicly expressed interest so far. Earlier this week, the Wall Street Journal reported that the Australia and New Zealand Banking Group is considering making a bid for the Korean bank.

Foreign investors have been worried about the Korean government's influence on its banks. Lone Star acquired KEB in 2003 for $1.2 billion, but has twice failed to sell it as investigations into the conditions of the initial purchase have blocked them.

The source at the lawmaker's office said that the letter sent by Klane, has cited corporate laws in the United States to describe how tight the Korean banking regulations are. ``But it neglected to mention that the United States has a very strict standard on banks owned by foreign capital,'' she added.

The bank confirmed that it did send the letter, but its public relations office explained that it was not intended as a protest.

``There was an inquiry from a lawmaker's office, asking for our opinion on that matter. So we just answered them on paper,'' a representative said.

KEB 규정 개정 항의

래리 클레인 외환은행 행장이 이 은행 이사회 구조에 대한 정부 개혁 드라이브에 항의하기 위해 일부 국회의원들에게 서신을 보냈다고 다중 소식통이 말했다.

국회 정무위원회 의원들에게 보낸 편지에서 클레인은 기업경영구조에 관한 규정이 더 심해지면 외환은 주식 매각이 더 어려워질 수 있다고 말했다.

클레인은 이사회의 사외이사 수에 관한 규정에 이의를 제기하고 있다. 현재 사외이사는 최소 3명으로 전체의 반 이상이어야 하는데 개정안에는 사외이사 수가 사내 이사 수보다 많도록 되어 있다.