KEB to escape Lone Star legacy

By Kim Jae-won

The Korea Exchange Bank (KEB) said Sunday that it will carry out a large-scale organizational change in a bid to streamline operations and create synergy between business units. The move is widely seen as an attempt to escape the legacy of former owner Lone Star Funds.

Under the control of Lone Star, the nation’s sixth-largest lender, which was acquired by Hana Financial Group earlier this year, suffered from stagnant growth as the U.S. buyout fund placed top priority on short-term performance to maximize shareholder value.

The lender said that it will give up a U.S.-style unit-based system and introduce a new one with a focus on creating synergy by exchanging human resources and strengthening cooperation between business units, which it expects will generate a “co-existence spirit among employees.”

“We plan to start the new system in mid- or late-July to boost efficiency among business groups. We have used the American system for the last decade, and found out that it does not fit us,” said a KEB spokesman.

Under the leadership of Lone Star, each department only focused on its own area, which helped ensure responsible management but hurt cooperative spirit.

Analysts say this is part of KEB CEO Yun Yong-ro’s efforts to reform the bank into a more effective and sales-focused entity. Hana Financial Group, the country’s fourth-biggest financial group, bought a controlling 51.02 percent stake in KEB from Lone Star in February with a price tag of 3.9 trillion won ($3.5 billion) after waiting for 15 months due to delayed regulatory approval.

Bureaucrat-turned-banker Yun fired nine executives at the bank in February whom the U.S. private equity fund had hired. He picked their replacements from both inside and outside of the bank including two retail banking experts from Hana.

He has also turned the organization into a sales-focused one by dispatching 105 employees from headquarters, accounting for 10 percent of the main office, to sales branches. He has also slimmed down the departments to eight business groups from 14.

KEB seeks to reduce inefficiency by introducing the so-called “one shot” personnel management system, under which the bank appoints managers and working-level officials at the same time. The bank used to have seven to 10 day intervals in the appointment of managers and assistant officials. The lender expects the new scheme to improve work efficiency.

KEB specializes in foreign exchange and trade financing. In terms of market share, it accounts for about half of the nation’s foreign exchange business and one-third of its trade financing thanks to its wide overseas networks.