By Kim Jae-kyoung
Shinhan Financial Group surprised the market Thursday by appointing Suh Jin-won, CEO of Shinhan Life Insurance, as the new CEO of Shinhan Bank, the flagship of the nation’s third largest financial group.
Suh was not on the leading candidate list ― which included Shinhan Financial Deputy President Wi Sung-ho, Shinhan BNP Paribas Asset Management CEO Choi Bang-gil and Shinhan Investment Corporation CEO Lee Hyuw-won ― even right before the group announced the new CEO.
The appointment indicates that the group will place top priority on stabilizing the organization first before pushing to overhaul the entity that has been damaged by the internal dispute among the top three executives ― former Shinhan Chairman Ra, former Shinhan CEO Shin and former Shinhan Bank CEO Lee baek-soon.
The internal feud has shown signs of settling down after Shin offered step down in early December in return for Shinhan Bank dropping its complaint against him. However, ahead of the new CEO appointment, there were signs that the group was again being divided into factions.
After former CEO Lee tendered his resignation Wednesday, Shinhan deputy president Wi and Shinhan Investment CEO Lee were considered leading candidates as the group needed someone to reform the organization.
However, with employees divided between the two leading candidates, the group decided to pick someone with less party factions. Suh was considered a neutral figure and not involved in the group’s internal strife, while Wi is known to have had the full confidence of former Chairman Ra.
The fact that the group gave only a 15-month tenure to Suh, the remainder of the outgoing CEO Lee’s time, suggests that Suh was picked for ensuring organizational unity. The group is likely to pick someone who is fit for organizational reform once Suh ends his term.
The 59-year-old veteran banker is facing a daunting task. Internally, he has to bring back unity and stability to the organization. To that end, Suh is expected to conduct a personnel reshuffle on a zero basis in order to minimize the influence from the top three. Suh is a personnel expert as he served as the head of the HR development team.
Externally, he has to come up with new strategies to strengthen the sales business and brace for the reshaping of the banking industry caused by Hana Financial Group’s takeover of Korea Exchange Bank (KEB).
“Suh is respected by both executives and employees as he has extensive experience and no party fractions within the organization. We expect that he will be able to settle the internal feud and stabilize the lender soon,” a Shinhan official said, asking not to be named.
Suh exhibited his management capacity and leadership as CEO of Shinhan Life. The insurance arm of the group is expected to post a net profit of 210 billion won this year, compared with 130 billion won in 2007 when he took the helm of the insurer.
At the same time, Suh’s another key task is to assist the new chairman of the group, who will be named in March, to reinvent Shinhan as the nation’s best financial services provider. His future could change, depending on how he leads the nation’s second-largest lender for the next three months,
The group is now temporarily controlled by Chairman Ryoo Shee-yul, who has been leading it since former Chairman Ra resigned on Oct. 30. At Shinhan, a special committee, led by Ryoo, was set up to name a new boss by March 2011.
In early December, the committee decided to go for a sole chairmanship system by eliminating the presidency in order to avoid disputes between top executives. It plans to appoint a new boss at the board meeting in February or March.
Among likely candidates for new chairmanship are former CEOs of Shinhan Financial Lee In-ho and Choi Young-hwi, Kim Pyung-joo, a professor emeritus at Sogang University, former vice finance minister Kim Seok-dong and former KAMCO chairman Lee Chul-hwi