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| From left are Cho Yong-byoung of Shinhan Financial Group, Son Tae-seung of Woori Financial Group and Son Byung-hwan, all chairman and CEOs of their respective banking groups. Korea Times file |
By Yi Whan-woo
Shinhan Financial Group Chairman and CEO Cho Yong-byoung's decision to drop out of the firm's next leadership race, Thursday, is heightening concerns that the banking industry is becoming more susceptible to the government's influence in the appointment of its chiefs.
The possibility has been raised of President Yoon Suk-yeol's administration intentionally influencing the industry as the terms for multiple financial services companies' chairmen are approaching their ends starting Dec. 31.
Some companies are fully affiliated with the government, and even the ones that are not lack a controlling shareholder and therefore remain vulnerable to interventions in their management made by outside parties.
Under the circumstances, Cho's decision surprised many because Shinhan Financial Group had been an exception in the banking industry, avoiding government pressure. He was anticipated to secure his third term, scheduled to begin in March 2023.
He first took office for a three-year term in 2017 and has been serving the second term since 2020.
He was among the three shortlisted candidates for the next chairmanship, including Shinhan Bank CEO Jin Ok-dong and Shinhan Card CEO Lim Young-jin. Jin was tapped for the job, Thursday, by the nomination committee.
Cho explained that he dropped out voluntarily because he wanted to pave the way for a generational change in leadership.
Contacted by The Korea Times, Friday, Shinhan Financial Group also said, "Cho is not believed to have been pressured by any outside party concerning his decision."
Nevertheless, industry sources say that he took into account the government's possible pressure on leaders of other banking groups and could not overlook it.
In November, BNK Financial Group Chairman and CEO Kim Jin-wan stepped down with about five months remaining before his term was due to expire amid the firm's alleged financial irregularities raised last month. The allegation was raised by Yoon's ruling People Power Party (PPP).
Also in November, the Financial Services Commission (FSC) issued a reprimand warning on Woori Financial Group Chairman and CEO Son Tae-seung over the improper sales of funds by Woori Bank in 2019.
Son had been doubling as head of Woori Bank and Woori Financial Group at the time. The warning bars him from holding positions at financial companies for three years, although his current term can be completed.
Son was anticipated to go for a third term when his second three-year tenure ends in March 2023.
Although it completed 23 years of government-led ownership and was fully privatized in 2021, Woori Financial Group will be susceptible to the government's influence if Son leaves because none of its stakeholders have shares that are sufficient enough to control its management.
Concerning NongHyup Financial Group, its Chairman and CEO Son Byung-hwan was expected to go for his second term when his tenure expires on Dec. 31. Whether he can do so remains unclear, as Lee Suk-joon, a former member of Yoon's camp for the 2022 presidential election, has emerged as a potential candidate to lead the banking group.
A retired career economic bureaucrat and former chief of the Office for Government Policy Coordination, Lee was a key architect of Yoon's economic and financial policies.
NongHyup Financial Group is wholly owned by the government-affiliated National Agricultural Cooperative Federation aimed at promoting the financial wellbeing of farmers.
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