Dust settles on banking CEO landscape
By Kim Tong-hyung
Mighty bankers fighting for their futures? Cagey veterans joining forces? A fallen bureaucrat shooting for redemption?
The banking sector just about had it all in its latest management turnover, not counting the predictable lack of an injection of youth.
There is always some change in the CEO ranks of the financial industry, but in recent months an anticipation lingered for an unprecedented slew of new boardroom appointments.
Among the leaders of the country’s four largest banking groups ― KB, Woori, Shinhan and Hana ― only KB boss Euh Yoon-dae was considered safe.
The other top bankers maneuvered frantically to extend their terms that end this month, and keeping them up at night was Kang Man-soo, the former finance minister with a thirst for power and a penchant for controversy, who appeared to be in play at all three firms.
As the dust now settles, the new banking CEO landscape looks like anything but. Woori Financial Chairman Lee Pal-seung and Hana Financial Chairman Kim Seung-yu are returning for more at the management helm, while old hand Han Dong-woo was picked to lead Shinhan Financial, replacing disgraced former Chairman Ra Eung-chan who had been ousted for substantiated irregularities and internal-management bickering.
As for Kang, he is now chairman of the state-run Korea Development Bank (KDB), where former boss Min Euoo-sung departed prematurely for an unknown reason.
Hana Chairman Kim has opted to keep his lieutenants, including group president Kim Jong-yeol and Hana Bank CEO Kim Jeong-tae. Woori Chairman Lee, however, moved to replace Woori Bank CEO Lee Chong-hwi with Lee Soon-woo, currently the bank’s deputy president, at the end of the month. Hana Chairman Han will have Hana Bank CEO Seo Jin-won as his right-hand man.
``Each banking group, in their own way, was at a crossroads. Woori is desperate to put itself back on track towards privatization, while Hana is betting everything on a successful acquisition of the Korea Exchange Bank. Shinhan is looking to regroup after the disruption caused by the former leadership,’’ said an industry source.
``With so much at stake, the weight was on the claim that steadiness was needed more at the banking groups than dramatic changes.’’
No arguing that. The real question is what happens next?
The story this spring isn’t merely about who stayed and who left, their strengths and flaws, or their egos and characters. It’s more about the roadmaps each executive will be charting in the coming months as they brace for a potential wave of consolidation that may sweep the financial service industry and forever influence its hierarchy.
The biggest source of changes is likely to be state-run Woori. After bailing out the group during the late-1990s Asian Financial crisis, the government has struggled to unload its 57 percent stake in the company, although one would argue that the commitment to privatization had been at most half-hearted.
The sale of the state-held shares was halted last December, when two lead bidders, backed by Woori employees and the bank’s corporate customers, withdrew from the process citing the high premium sought by the government.
Although he is desperate for a breakthrough in the privatization process, Woori Chairman Lee is also determined to keep the group intact and has been looking for the type of investors who would make this possible. However, some potential suitors would rather have Woori cut up and severed a la carte.
Among Woori’s affiliates, Woori Investment and Securities appears to be generating the highest demand. The most obvious interest comes from KDB’s Kang, who since his days as a policymaker has been claiming that it’s high time the country has its own mega-bank. According to industry sources, KDB is looking to put pressure on Woori to permit Woori Investment and Securities be absorbed by the KDB-owned Daewoo Securities. A new and fit KB Financial is also seen as a potential suitor for Woori Investment and Securities, although one could be assured that Woori’s Lee will be looking at every other option first.
Hana, the smallest of the big-four banking groups, is determined to execute its acquisition of the Korea Exchange Bank (KEB), which will allow it to compete with its rivals. The group signed a 4.7 trillion won (about $4.2 billion) contract to buy a 51 percent stake in KEB from Texas-based Lone Star Funds last November.
However, the transfer of shares has become increasingly complicated. The deal is still contingent to approval by the Financial Services Commission (FSC). With a Seoul court recently finding former Lone Star executives guilty of stock manipulation that appears to have helped the buyout firm acquire KEB cheaper in 2003, the financial regulators are facing a difficult decision.