Banks' reshuffling swayed by external forces
By Choi Kyong-ae
Banks have started reshuffling executives, but under the influence of external forces.
Concerns that the financial authorities or the political sector will sway planned personnel changes are gaining force following Woori Bank’s recent CEO appointment, economists said Tuesday.
Last week, Woori Bank Executive Vice President Lee Kwang-goo was appointed as CEO of the bank, stirring speculation that Lee beat others as he went to Sogang University, which President Park Geun-hye graduated from. He is widely known as a key member of Seogeumhoe, a club open exclusively to Sogang graduates working in the financial industry.
On Monday, Woori gave promotions or made appointment to positions of vice presidents and lower-level executives. Other banks are set to make announcements on their personnel changes later this month.
Chiefs of financial holding companies and commercial banks have often selected executives following instructions from the financial authorities or Cheong Wa Dae.
“They do this even if they have the full power to appoint executives. It is a shame on them,” KDB Daewoo Securities analyst Kim Joong-han said.
Faced with escalating criticism of bureaucrats-turned-executives, the financial authorities seem to be trying to intervene less into banking personnel changes. For example, the authorities reportedly wanted former Citibank Korea CEO Ha Yung-ku to become chief of KB Financial Group but the bank’s board of directors selected former Chief Financial Officer Yoon Jong-kyoo for the top job.
However, it remains to be seen whether other domestic banks will be able to select their chiefs without bowing to pressure from financial officials and politicians.
KB Kookmin, Shinhan, Hana and the Korea Exchange banks are expected to reshuffle their executives soon. Many of their vice presidents and outside directors’ terms end in December or March.
As for KB Financial Group, the country’s biggest retail bank is expected to have more outside director positions to be filled after Dec. 12. The bank’s board Chairman Lee Kyung-jae resigned from the post and also his outside director position on Nov. 21 when Yoon began his three-year term.
On Friday, director Koh Seung-hee who teaches accounting at the Sookmyung Women’s University also quit. A couple of other directors look set to resign from the well-paid, highly responsible job this Friday.
KB’s outside directors have been under criticism that they failed to mediate an internal feud between two former top executives over the change of a banking computer system. The former KB Financial Chairman Lim Young-rok and KB Kookmin President Lee Kun-ho left the bank in September following punitive warnings by the financial authorities against them for mismanagement.