Despite Strong Female Wave, 'Minor' Changes...Completion of Outside Director Appointments at 4 Major Financial Holding Companies

Expansion of Outside Directors in 4 Major Financial Firms
Female Outside Directors Exceed 30%
Most Reappointed, Turnover Remains 'Minimal'

As the appointment process for outside directors at the four major financial holding companies (KB, Shinhan, Hana, Woori) concludes, each company is expanding the number of female outside directors, bringing a strong wave of female influence to the financial holding companies' boards. However, despite ongoing accountability issues such as the Hong Kong H-Share Index (Hang Seng China Enterprises Index·HSCEI) equity-linked securities (ELS) incident, the overall turnover rate of outside directors remains relatively low.

Four Major Financials Expand Outside Directors

According to the financial sector on the 5th, the boards of the four major financial holding companies have completed the recommendation process for new outside director candidates to be proposed at this month's shareholder meetings. Across the four major financials, 7 existing outside directors resigned or retired due to term expiration, and 9 new candidates were recommended.

At KB Financial, Chairman Kim Kyung-ho stepped down after his term expired, and Lee Myung-hwal, Senior Research Fellow at the Korea Institute of Finance, was recommended as a new outside director. At Shinhan Financial, outside director Lee Yoon-jae expressed his intention to resign, and outside director Sung Jae-ho stepped down due to term expiration. Former Woori Asset Management CEO Choi Young-kwon and Professor Song Sung-joo of Korea University’s Department of Statistics were newly recommended to fill the vacancies.

At Hana Financial, three outside directors are scheduled to leave due to term expiration, while four new appointments were made: former Customs Service Commissioner Joo Young-seop, former Deloitte Anjin CEO Lee Jae-sul, former Samsung SDS Cloud Business Vice President Yoon Shim, and Professor Lee Jae-min of Seoul National University Law School. This increased the number of outside directors from 8 to 9. Woori Financial also recommended two new outside directors, Professor Lee Eun-joo of Seoul National University’s Department of Communication and Information and Professor Park Sun-young of Dongguk University’s Department of Economics, increasing the number from 6 to 7.

The financial holding companies also expanded the total number of outside directors with these new appointments. Hana Financial increased its outside director quota from 8 to 9 by adding one more outside director. Woori Financial also increased from 6 to 7. KB Financial maintains 7, and Shinhan Financial maintains 9. Thus, the total number of outside directors across the four major financials rose from 30 to 32, an increase of 2.

The expansion of the boards by financial holding companies is aimed at proactively responding to the "Best Practices on Governance of Bank Holding Companies and Banks" (hereafter Best Practices) established by the supervisory authorities at the end of last year. Each financial holding company and bank must establish and submit an implementation plan (roadmap) in accordance with the Best Practices to the authorities before their shareholder meetings.

According to the Best Practices, the average size of boards in domestic banks is currently 7 to 9 members, which is significantly smaller than the 13 to 14 members typical of major global banks. This results in each outside director overseeing up to 6 committees domestically, compared to up to 4 overseas, which the supervisory authorities say affects the ability to demonstrate expertise.

Strong Female Presence... Female Outside Directors Exceed 30%

Alongside this, financial holding companies have significantly increased the number of female outside directors. Shinhan Financial Group recommended Professor Song as a new outside director candidate, raising the total number of female outside directors, including Yoon Jae-won and Kim Jo-seol, to three.

As a result, among the total 32 outside directors across the four major financial holding companies, 10 (approximately 31.3%) are women, surpassing the 30% mark. Previously, except for KB Financial and Shinhan Financial, all others had only one female outside director, but Hana Financial and Woori Financial increased their female outside directors to two each, raising the overall female ratio.

Hana Financial held a board meeting on the 29th of last month and increased the number of female outside directors to two. Hana Financial expanded its outside directors from 8 to 9, and by appointing Yoon Shim, former Samsung SDS Vice President, as a new outside director, the number of female outside directors rose to two, including the existing Professor Won Sook-yeon of Ewha Womans University.

Woori Financial also increased the proportion of female outside directors. Professors Lee Eun-joo and Park Sun-young, both women, were newly recommended as outside directors. The number of outside directors at Woori Financial increased from 6 to 7, with female directors rising to two.

At KB Financial, 3 out of 7 outside directors are women, the highest female outside director ratio (approximately 42.9%) among the five major financial holding companies. Director Kwon Sun-joo was re-nominated this time, maintaining the three-woman lineup including Directors Cho Hwa-jun and Yeo Jeong-seong. There is also interest in whether a female board chairperson will be elected. With Chairman Kim Kyung-ho’s term expiring, a new board chairperson must be elected. Director Kwon has been serving for four years and is a seasoned figure in the financial sector, having been the first female bank president.

NH Nonghyup Financial will decide on outside director replacements at the end of this month; currently, 2 out of 7 outside directors (28.6%) are women. It is expected that the number of outside directors and the female ratio will remain unchanged at this shareholder meeting.

This strong female presence also appears to be influenced by the Best Practices. The supervisory authorities have pointed out that while global financial companies have significantly strengthened gender diversity, the proportion of female directors in domestic banks remains around 12%. For example, Citibank in the U.S. has a female director ratio of 53.8%, with Wells Fargo (38.5%) and Bank of America (BoA, 35.7%) also around 35%.

Most Reappointed... Turnover is Slight

However, despite these trends, the actual degree of change appears limited. Many outside directors have been reappointed. At KB Financial, 3 out of 4 outside directors whose terms expired were reappointed, and at Shinhan Financial, except for the two retiring outside directors, all others were reappointed. Hana Financial and Woori Financial also had 2 and 3 reappointments respectively.

Overall, a significant number of outside directors whose terms expire this month are being reappointed. A banking sector official said, "The current board structure is such that major shareholders like private equity funds and foreigners each recommend outside directors reflecting their interests, so it is practically difficult to drastically change the composition."

Similarly, many board members still come from academia, such as professors and researchers. Among the 9 newly recommended outside director candidates, 4 (about 44.4%) are from academia, the largest group. Considering that 4 out of 7 outside directors leaving due to term expiration (about 57.1%) are from academia, there is little change.

The industry has recently expressed difficulties in recruiting outside directors. A financial sector official said, "As the supervisory authorities significantly strengthen the roles and responsibilities of outside directors, many potential candidates decline. As a result, there is a large tendency to find new candidates within the existing pool of professors and legal professionals."

This content was produced with the assistance of AI translation services.