[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 sector is closely watching the decision made by the KB Financial Group Chairman Candidate Recommendation Committee (the Committee), which overturned expectations that Chairman Yang Jonghee would be reappointed and instead selected Lee Jaekeun, Head of Global Business Division, as the candidate for the next chairman. By nominating Lee, born in 1966, as the next chairman candidate, KB Financial Group is signaling a generational shift, leading to keen interest in the changes that are likely to take place in the future. Within the industry, KB Financial Group's unconventional personnel move is considered a 'signal' heralding a shift in hiring practices, and it is expected to have a significant impact on year-end executive appointments throughout the financial sector.

According to the financial industry as of September 16, KB Financial Group has a total of 12 Chief Executive Officers (CEOs) across its 11 domestic subsidiaries, including the IB and WM divisions of KB Securities. Of these, the terms of 10 CEOs, except for Kang Jindoo, head of IB at KB Securities, and Kwak San-up, CEO of KB Savings Bank, will expire at the end of this year. With the possibility of new top executives, follow-up appointments of other executives are also highly likely, meaning that the fate of executives at major KB Financial Group subsidiaries will largely be determined at the end of this year.

According to the latest semi-annual report, among 23 non-registered executives at KB Financial Group, the terms of 19—including Lee—will end at the end of this year. If Lee moves up to become chairman, the remaining 18 members of the management team are also likely to be included in the year-end reshuffle. On September 14, Lee commented on the direction of year-end appointments, stating, "The appointment of subsidiary CEOs will be decided through discussions within the CEO Candidate Recommendation Committee." However, there is a prevalent view that the new chairman is expected to appoint personnel who will work in close alignment with him to key positions.

Although Lee stressed that the idea of a "younger KB" does not simply equate to generational change based on age, he also affirmed that appointments would be made based on competence rather than age. This has drawn attention to the futures of executives who are older than Lee. Currently, the main subsidiary CEOs who are older than Lee include Lee Hwanjoo, president of KB Kookmin Bank; Lee Honggu, head of the WM division at KB Securities; Sung Chaehyun, CEO of KB Real Estate Trust; and Park Chanyong, CEO of KB Datasystem Co., Ltd.—a total of four individuals. One commercial bank official commented, "Under the upcoming Lee Jaekeun chairmanship, there could be major changes in key executive positions. Given that Lee repeatedly emphasizes messages such as 'We will not be complacent about being number one,' 'We will push for reform,' and 'We will transform into a younger system,' it is hard to dismiss this as mere rhetoric."

It now appears inevitable that the medium- and long-term management strategy, previously expected to be finalized by October at the latest, will need to be revised. KB Financial Group establishes its medium- and long-term business strategies every three years, and this year is a reset year for those plans. As Lee has declared he will present a new standard for the financial industry in response to management environment changes such as artificial intelligence (AI) and an aging population—and that he will not settle for being number one—the business strategy is likely to be adjusted to reflect the direction of the incoming chairman's leadership.

Within the industry, there is speculation that the generational shift starting at KB could spread to other financial firms. The terms of CEOs at the five major commercial banks in Korea—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—all end this year. Many CEOs at the group subsidiaries of these five major financial groups also face their terms ending soon, signaling a potentially large-scale reshuffle in the second half of the year. Considering that the terms of 54 CEOs at subsidiaries of the five major financial groups will end, the scope of year-end executive appointments in the industry could be extensive.

Particularly notable is that even though Chairman Yang achieved record results—such as being the first financial holding company CEO to deliver an annual net profit of 5 trillion won in 2024—he failed to secure reappointment. This is leading to views that the established norm, where strong results support reappointment, has now been shaken.

Additionally, on the previous day, Lee Chanjin, Governor of the Financial Supervisory Service, pointed out at an executive meeting that the management succession procedures at financial holding company subsidiaries are insufficient and called for improvements ahead of this year’s year-end financial sector CEO appointments. As a result, it is expected that in the process of deciding whether CEOs are reappointed, not only verification of individual performance and skills, but also the procedural fairness and transparency will be further strengthened.

A financial industry insider said, "It was unexpected for the Committee at KB Financial Group to select a candidate with the nature of being scouted when current performance under the incumbent chairman had been good. This decision may serve as a signal for the industry, which has so far used performance as the main criterion when deciding on reappointment."

Board members at other financial holding companies are also closely watching the decision. A director, who serves as an outside director at one of the eight major financial holding companies, commented, "It is unavoidable that other financial holding companies will be influenced by the Committee's decision at KB Financial Group."

Meanwhile, although Chairman Yang personally met with National Assembly’s Political Affairs Committee members in August in a last-minute effort to secure reappointment, he ultimately failed. The financial industry is offering various interpretations about the reasons, including the influence of the former chairman, while some suggest political factors might be at play. However, a KB Financial Group official flatly denied this, stating, "There was no external intervention."

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