Financial firms face reshuffle of top executives

By Nam Hyun-woo

Kwon Seon-joo, Industrial Bank of Korea CEO

• Published Aug 24, 2016 5:16 PM KST
• Updated Aug 24, 2016 5:16 PM KST

Korea’s major banks and financial groups are expected to reshuffle their top executives whose terms expire around the end of this year.

Three big lenders ― the Industrial Bank of Korea (IBK), Woori Bank and KEB Hana Bank ― have CEOs whose tenures end in December.

IBK CEO Kwon Seon-joo’s term ends on Dec. 27. The IBK is a policy lender whose largest stakeholder is the Ministry of Strategy and Finance with 50.6 percent, as of March, so the government is entitled to decide who will lead the bank.

For the 25th IBK CEO, the Financial Services Commission (FSC) plans to recommend a candidate for President Park Geun-hye’s approval.

When Kwon took the helm of the IBK in December 2013, she made headlines for being the first female chief in the country’s banking industry. Following her predecessor Cho Joon-hee, she was promoted to the top post, not parachuted in from the outside, allowing the bank to expect a CEO from the inside this time too.

A bank official said “the bank’s employees are hoping another insider will become the new CEO” and such a promotion could be a custom. Industry sources say Senior Executive Vice President Park Chun-hong and Management Strategy Group chief Kim Do-jin are expected to be on the FSC’s candidate list, but several outside figures are also reportedly being tapped for consideration.

Another scenario is Kwon’s reappointment. During her three-year term, the IBK posted a surprising 1.32 trillion won ($1.17 billion) net profit in 2014, up 20.8 percent from a year earlier, and recorded 1.15 trillion won in net income last year, marking a straight year posting more than 1 trillion won in net profit. In the first-half this year, the bank’s net profit was 663.7 billion won.

The performance helped the reappointment scenario pick up momentum, but some say it is unlikely, because only two former IBK CEOs have served consecutive terms in its 55-year history -- Jeong Woo-chang, who served from fourth to fifth, and Kang Kwon-seok, who served from 20th to 21th.

Three days after Kwon’s term expires, Woori Bank CEO Lee Kwang-goo will end his two-year term. Under Lee’s leadership, Woori’s net profit in the first half of this year was 750.3 billion won, up 45.2 percent, or 233.4 billion won, compared with the first half of 2015. The bank also managed to enter its long-stalled privatization process earlier this week, with observers saying Lee’s investor relations efforts helped it.

According to Woori Bank, a recommendation committee to name a new CEO will be assembled a month before the incumbent CEO’s term expires. This time, this usual process overlaps with the privatization deal that the bank expects to be wrapped up in December.

Since the government is trying to sell a 30 percent stake to investors, it will organize the members of the recommendation committee, meaning who takes the top post will likely be decided in March and Lee may serve as an acting CEO until then.

The government, which is the largest stakeholder in the bank, has cleared that it will let the new board name the CEO, with Public Funds Oversight Committee head Yoon Chang-hyun saying: “The government will support new outside directors to take part in the naming process of the next CEO.”

The outlook on Lee serving another term is bleak, because only former CEO Lee Soon-woo served a consecutive term. Lee served another term during the process of the merger between Woori Bank and Woori Financial Group.

“The most important factor right now is the privatization process,” said a Woori Bank official. “With the process going on, talking about who will take the post became meaningless. Who is going to be the new shareholder will decide the next CEO,” he said, adding that naming one from the inside will help the bank stabilize and get back on track promptly.

KEB Hana Bank CEO Ham Young-joo’s term will end in March next year. Ham has been serving as the bank’s CEO since Korea Exchange Bank and Hana Bank merged in September last year. Observers say Ham will likely serve another term, citing he will be serving only a year and a half in the post and his leadership helped the merged bank stabilize.

Shinhan Financial Group Han Dong-woo’s term will also end in March and NongHyup Financial Group Chairman Kim Yong-hwan will follow in April.

A source in Shinhan group said Shinhan Card CEO Wi Sung-ho and Shinhan Bank CEO Cho Yong-byoung are vying for the chairmanship.

NongHyup’s Kim is unlikely to see his term extended because the group has been hit hard amid corporate restructuring on shipbuilding and the shipping industry earlier this year.

There are also financial firms whose CEOs will leave their offices soon. Korea Exchange CEO Choi Kyung-soo and Korea Credit Guarantee Fund CEO Seoh Geun-woo’s terms end on Sept. 30.