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| National Pension Service headquarters in Jeonju, North Jeolla Province / Yonhap |
By Lee Min-hyung
Major financial groups here face uncertain outcomes ahead of their regular shareholders meetings this week, as the National Pension Service (NPS) is highly likely to cast dissenting votes on key proposals as the largest shareholder of the nation's top four financial holding firms.
The state-run pension fund has for years intervened in the decision-making processes of KB, Shinhan, Hana and Woori Financial Group, disapproving of such initiatives as leadership reshuffles and appointments of non-executive directors.
The industry is paying particular attention to whether the NPS will oppose Hana Financial Group's plan to change up its leadership. Hana put the proposal on the agenda for its upcoming shareholders meeting to be held on Friday.
The NPS holds a 9.19 percent stake in Hana, so chances appear slim that the fund's dissenting vote will end up blocking Hana's nomination of Ham Young-joo as chairman. But one risk factor is that the NPS' repeated disapproval may leave a negative impression on the company at a critical juncture when it needs to win more trust from overseas investors to enhance its stock valuation.
Last week, Ham lost an administrative suit against a financial watchdog here over the group's involvement in mis-selling of risky derivative-linked funds (DLFs). The NPS is widely expected to raise the issue to back up its possible disapproval of Ham's promotion.
On Thursday, Shinhan Financial Group will be the first of the major financial holding firms here to hold its regular shareholders meeting. But the NPS is known to have come to an internal conclusion to cast a dissenting vote on Shinhan's plan to reappoint five of its non-executive directors.
The pension fund took issue with Shinhan's poor internal supervision over its involvement in sales of problematic derivatives of Lime Asset Management. The NPS holds an 8.78 percent stake in Shinhan.
KB Financial Group is set to discuss the introduction of a union-backed outside director appointment system for the first time among commercial banking groups here. KB's union has recommended outside director candidates four times since 2017, but was rejected each time amid backlash from shareholders. If Kim Young-soo, former vice president of the state-run Export-Import Bank of Korea, wins approval at this year's shareholders meeting, he will become KB's first outside director recommended by the union.
Woori Financial Group plans to put its proposed appointment of Lee Won-duk as a new leader of Woori Bank and a non-executive director to shareholders during its meeting on Friday. Earlier, the Institutional Shareholder Services advised investors to vote against the decision by Woori's management, citing its involvement in a series of legal disputes ― such as Woori Bank's mis-selling of risky DLFs.
"Even if the NPS casts dissenting votes against the proposals by financial firms, there stands a low possibility that the pending issues will end up failing to get approval at the upcoming shareholders meetings," an industry source said. "The unilateral disapproval by the pension fund has become more of a common practice in the industry, which will do no good for building a win-win relationship between financial firms and shareholders."
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