An internal conflict in KB Financial Group is showing signs of recurrence after the nation’s second-largest banking group nominated the head of its flagship banking unit this week.

On Thursday, the financial group’s head-selection committee promoted the bank’s senior executive vice president Lee Keon-ho to president and CEO, and named heads of other group affiliates, including its card unit. Lee will take office after the nomination is approved by the board and at shareholders’ meetings. 

Shortly after the announcement, the union of KB Kookmin Bank threatened to take collective action against the nomination.

Union leader Park Byong-kwon said KB Financial Group chairman Lim Young-rok broke his promise to name an “internal figure” to head the bank.

“If an outsider is appointed as the next bank president, the nominee will undergo difficulties in managing the bank for his whole tenure due to extreme resistance from the inside,” he said.

Nominee Lee is a professor-turned-banker. He has been one of the No. 2 men in the bank since he joined the lender in 2011.

But the union does not regard him as an “internal person,” citing his short career at the bank.

Union officials said the group had sought to classify outsiders, who have no connections with the bank and are backed by financial authorities, into a group of internal figures to boost their chances of getting top posts.

“We will fight against the scheme to push for government-controlled finance,” the union said.

But the banking group refuted the union’s claims, saying Lee was evaluated as the best person to settle the internal conflict that has dragged on since the merger of Kookmin Bank and Korea Housing Bank to create the KB Kookmin Bank in 2001.

Group chairman Lim said it is not important to focus on whether a nominee is from the bank and how long he has worked at the company. What matters is that whether he has ability to tide over the crisis situation currently facing the bank, Lim added.

The controversy surrounding the nomination of the bank head erupted less than a month after chairman Lim and the union buried the hatchet over his chairmanship.

Early in June, Lim, a former financial bureaucrat, was named to head the banking group, succeeding Euh Yoon-dae. But for weeks, the union blocked him from his office in protest over what it claimed was the government’s intervention in the selection. The union ended the blockade after a meeting between Lim and the union leader in the middle of last month.

By Chung Joo-won (joowonc@heraldcorp.com)