[Financial Microscope] Generational Shift at KB: Will a Year-End CEO Appointment Storm Hit the Financial Sector?

Year-End Terms Expire for 10 KB Affiliate CEOs

Yang Jonghee’s Failed Reappointment Shakes the "Performance = Reappointment" Formula

Terms of 54 CEOs at the Five Major Financial Groups End This Year

The financial industry is closely watching the decision by the KB Financial Group Chairman Candidate Recommendation Committee (the “Committee”), which, contrary to expectations of Chairman Yang Jonghee's likely reappointment, has selected Lee Jaekeun, head of the Global Business Division, as the next candidate for chairman. With the nomination of Lee, born in 1966, as the next chairman, all eyes are on the generational shift underway at KB Financial Group and the changes that may lie ahead. The financial sector perceives this bold move as a signal of changing HR practices, suggesting it could have a significant impact on personnel decisions across the industry at the end of this year.

According to the financial industry on September 16, KB Financial Group has 12 chief executive officers (CEOs) across its domestic subsidiaries, including the IB and WM divisions at KB Securities. Of these, the terms of 10 CEOs, except for Kang Jindoo, CEO of KB Securities' IB division, and Kwak Sanup, CEO of KB Savings Bank, will expire at the end of this year. As changes in leadership are likely to bring about subsequent executive appointments, the fate of senior executives at KB Financial Group’s major domestic subsidiaries is also expected to be decided by year-end.

Based on the company's semi-annual report, 19 out of 23 non-registered executives at KB Financial Holdings, including Lee, will see their terms end this year. Given Lee’s transition to CEO, the remaining 18 members of the holding company’s management team are also expected to be considered in the year-end personnel appointments. On September 14, Lee commented on the direction of year-end appointments, saying, “The selection of subsidiary CEOs is a matter to be discussed and decided together at the CEO Candidate Recommendation Committee.” However, it is widely predicted that the new chairman will appoint executives with whom he can work closely to key positions.

In particular, while Lee drew a line at equating a “young KB” with a mere generational shift based on age, he emphasized that appointments would be based on competence rather than age, drawing attention to the prospects of executives older than him. Currently, there are four major subsidiary CEOs at KB Financial who are older than Lee: Lee Hwanjoo, President of KB Kookmin Bank; Lee Hongku, Head of the WM Division at KB Securities; Sung Chaehyun, CEO of KB Real Estate Trust; and Park Chanyong, CEO of KB Data Systems. One commercial bank official said, “Under the incoming chairman Lee Jaekeun, there is a high possibility of significant changes in the appointment of key executives. Given his repeated messages about not resting on being number one, pursuing reforms, and shifting to a younger system, it is hard to dismiss this as rhetoric alone.”

Furthermore, it appears that revisions to the medium- to long-term management strategy, which was initially expected to be finalized by October at the latest, are now inevitable. KB Financial Group establishes a new medium- to long-term management strategy every three years, and this year is the time to draw up a fresh plan. Since Lee has declared his intention to respond to changes in the business environment, including artificial intelligence (AI) and an aging population, and not to be complacent with being number one, the strategy is likely to be adjusted to reflect the management direction under the next chairman.

There are also projections that generational change initiated by KB could spread to the rest of the financial sector. The terms of CEOs at Korea’s five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—will all expire at the end of the year. Additionally, many subsidiary CEOs at the five major financial holding companies are nearing the end of their terms, foreshadowing a major shake-up in personnel appointments in the second half of the year. Considering that the terms of 54 CEOs at the five major financial holding companies and their subsidiaries are ending, there is a growing expectation that the scale of year-end HR changes in the financial sector could be considerable.

In particular, there is growing assessment that the traditional formula linking solid performance with reappointment has been shaken. Despite Chairman Yang’s outstanding performance, including becoming the first financial holding company CEO to achieve an annual net profit of 5 trillion won in 2024, he failed to secure another term.

Furthermore, on the previous day, Financial Supervisory Service Governor Lee Chanjin urged improvements in succession procedures at financial group subsidiaries, highlighting the inadequacy of current practices in an executive meeting ahead of year-end CEO appointments in the financial sector. As a result, the process for determining the reappointment of financial sector CEOs at year-end is expected to see greater procedural fairness and transparency, not just a focus on performance and other qualifications.

A financial industry insider said, “It was unexpected that the KB Financial Committee would select a candidate with strong characteristics of a surprise pick over an incumbent chairman with solid performance. This decision could signal a shift in the longstanding banking custom of using performance as the main criterion for determining whether to reappoint executives.”

Board members at other financial holding companies are also said to be watching the outcome closely. A board member at one of the eight largest financial holding companies in Korea remarked, “It’s impossible for other groups not to be influenced by the Committee’s decision at KB Financial Group.”

Meanwhile, despite Chairman Yang’s efforts to secure reappointment, including meeting lawmakers on the National Assembly’s Political Affairs Committee in August until the very end, several theories are circulating in the financial sector as to why he ultimately failed, including the influence of previous chairmen. Some speculate that political factors may have played a role. A KB Financial Group official flatly denied this, saying, “There was no external intervention.”

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