By Kim Jae-kyoung
With Shinhan Financial Group CEO Shin Sang-hoon bowing out, the group is expected to speed up efforts to find a new leader to fill the management vacuum caused by the internal feud among the three chief executives ― former Chairman Ra Eung-chan, Shin and Shinhan Bank CEO Lee Baek-soon.
On Monday, Shin and Lee reached a compromise to settle the conflict in order to bring stability back to the organization. Shin expressed his intention to step down in exchange for Shinhan Bank, the flagship of the group, dropping its complaint against Shin.
In a press release, Shinhan Bank said that the two chief executives reached an agreement to reconcile for the group to quickly return to regular operations and protect its corporate value.
“Under the agreement, Shin will step down, while the bank dropped its complaint. They shared the view that it is urgent to be united for a common purpose amid the rapidly-changing market environment,” a bank official said.
On Sept. 2, the bank filed a complaint with the prosecution against Shin for his alleged involvement in embezzlement and a breach of trust, and later in the month, the group’s board suspended Shin from his duties. The former chief of the bank is now under a prosecutors’ investigation into charges involving extending loans illegally to his relatives’ firms and pocketing consulting fees.
With a three-month-long internal feud settling down, attention is now being paid to who will take the helm of the nation’s third largest financial group, which is now temporarily controlled by Chairman Ryoo Shee-yul. Ryoo has been leading the group since former Chairman Ra Eung-chan resigned on Oct. 30 by taking responsibility for the group's internal strife.
At Shinhan, a special committee, led by Ryoo, was set up to name a new boss following Ra’s resignation. The committee consists of nine directors excluding the big three. It will run the group until March, when a general meeting of shareholders is slated to be held.
The committee is set to meet Thursday to discuss how to reform its governance structure. The group is mulling changes to its current governance structure, the one headed by two leaders _ chairman and CEO, to a sole chairmanship system. After changing its governance structure, it plans to appoint a new boss at its board meeting in February or March.
Currently, there has been a lot of speculation concerning Shinhan’s next chairmanship ― government-influenced appointees, or next-generation Shinhan executives.
But with the internal strife resolved, chances are that former CEOs of Shinhan Financial ― Lee In-ho and Choi Young-hwi ― will lead the group for the next three years to get it back on track as soon as possible.
“Nothing has yet to be decided but given that the committee puts top priority on stability, it is highly likely that the committee will pick a person with rich experience and deep knowledge of the group,” a person close to the committee told The Korea Times on condition of anonymity.
“One possible scenario is that former Shinhan Financial CEO Lee In-ho or Choi Young-hwi will lead the group for one term or three years and once the group regains stability, the next-generation Shinhan executives will take the helm,” he added.
There are several other candidates’ names being floated around. They include Lee Hyu-won, CEO of Shinhan Investment Corp.; Lee Jae-woo, CEO of Shinhan Card; Lee; and Hong Sung-kyun, a former CEO of Shinhan Card.
However, since the big three are all under prosecutors’ investigations, the outcome of the ongoing probe can derail the group’s plan for governance reform. Ra was slapped with stern disciplinary action by the country's financial watchdog for holding illegal bank accounts under borrowed names.
If the prosecutors indict all of them, Ra and Shin will be under pressure to step down as board members. In that case, Lee’s future will also become uncertain. The prosecution said that it will take into consideration the lender’s withdrawal of its complaint against Shin.
The group's problems came amid rampant speculation that the move to oust Shin might have been engineered by Ra, who suspected Shin of prodding lawmakers into bringing up the bank accounts issue to spur the regulator to launch a probe.