Woori, Shinhan, KDB to select new heads in March amid looming industry consolidation
Veteran bankers and former bureaucrats are jockeying in several races for top financial business posts dogged by alleged political pressure, in-house power struggles and procedural disputes.
Woori Finance Holdings and Shinhan Financial Group plan to select their new heads next month. Hana and KDB groups are also set for a top-level shakeup with incumbents’ terms expiring in March and June, respectively.
The next chiefs will take their positions at a time of sweeping industry consolidation and market expansion.
Big-ticket mergers and acquisitions are under way, heralding major changes in the industry landscape and setting the stage for cutthroat competition for market leadership.
The government is also poised to revive policies to advance the capital market and investment banking, which were frustrated by the global financial meltdown in 2008-09.
One of biggest management changes in the nation’s banking industry has been marred by nepotism allegations, with former presidential aides and powerful officials rumored to top the lists of potential candidates.
It has been a long-held custom in Korea for retired bureaucrats to migrate to industry helms, taking advantage of the prowess, clout and connections they have built while in office.
This time around, the issue is more sensitive than ever, with the entrance on the scene of Kang Man-soo, often thought of as President Lee Myung-bak’s economic mentor.
As Lee’s first finance minister in 2008, he exerted a controversial policy mix of interventionism and liberalization ― meddling in currency markets, pressuring business leaders to invest and hire, affording blatant favors to conglomerates, cutting taxes for the wealthy and corporations, and drastically dismantling business regulations.
He proved himself a fortunate survivor. Before his 2008 return to public life, Kang had been out in the cold after leaving office in the wake of the 1997 economic crisis, for which he was deemed partly responsible.
Kang resigned in February 2009 after his policies were much blamed for the foreign exchange crisis that battered the nation the previous year. But he was quickly appointed to head a presidential advisory body for industrial policies.
The prospect of Kang as industry mogul raised the eyebrows of market participants, the media and the public, who do not have much faith in him.
Kang recently took a step back, saying that he had no interest in working in the financial industry.
He had been the most powerful hopeful for next chairman of Shinhan Financial Group, Korea’s third-largest banking group.
Kang was absent from the list of chairman candidates picked by the group’s selection committee this week.
On Tuesday, the ad-hoc panel short-listed four candidates for chairmanship, which has been vacant for more than three months.
The group has been led by interim chairman Ryoo Shee-yul since late October when Ra Eung-chan, chairman since 2001, resigned after regulators reprimanded him for alleged violation of real-name account rules.
Shinhan’s reputation for transparency and governance was tainted by an internal feud involving Ra and two other top executives.
Before the panel met, its decision-making procedure had been gripped by controversy. Ryoo, one of the front-runners, was eligible to cast a vote. Amid the outcry, Ryoo finally dropped out of the race.
The committee will conduct job interviews with the candidates on Monday and single out one final nominee, subject to approval by Shinhan’s board, which will meet Feb. 21, and shareholders next month.
Industry insiders are still watchful of whether Kang would give up on other opportunities, including at state-owned Woori Finance, the nation’s top financial group.
There is a possibility that incumbent Woori chairman Lee Pal-seung, whose three-year term ends in March, may stay if Kang does not challenge him.
Woori Finance will come up with candidates and propose one to the board of directors by the end of this month. Shareholders are scheduled to hold an annual meeting on March 25 to endorse the final candidate.
Woori Bank CEO Lee Chong-hwi will also finish his term in March.
The management changes at Woori may be swayed by the result of the scheduled privatization of the financial group.
Other former and incumbent financial regulators have also been tapped for financial institutions.
Four Shinhan candidates selected from a total of 26 hopefuls include Han Taek-soo, a former Finance Ministry official. He competes against Han Dong-woo, a former vice chairman of the group’s life insurance unit; Choi Young-hwi, a former Shinhan Financial CEO; and Kim Pyung-joo, an honorary professor of Sogang University.
For Woori, Kwon Hyouk-se, vice chairman of the Financial Services Commission, is mentioned as a promising candidate, along with Yun Yong-ro, former CEO of the state-owned Industrial Bank of Korea.
Hana Financial Group chairman Kim Seung-yu will also finish his term next month.
Market observers predict that Hana, Korea’s fourth-largest banking group, is expected to give Kim another term to complete its takeover of Korea Exchange Bank.
Kim Yong-hwan, former senior deputy governor of the Financial Supervisory Service, took office as state-run Export-Import Bank of Korea this week.
