Ahead of Year-End Appointments, Lee Chanjin Warns: "Financial Holding Company CEO Succession Procedures Inadequate"
Call for Improvements in Closed CEO Appointments Based on Factions or Personal Ties
54 CEOs at Affiliates of the Big Five Financial Groups to See Terms Expire by Year-End
Financial Supervisory Service to Strengthen Oversight of CEO Succession Procedures
Lee Chanjin, Governor of the Financial Supervisory Service, has called for improvements in the management succession procedures of financial holding company subsidiaries, ahead of year-end CEO appointments in the financial sector.
According to the Financial Supervisory Service on September 15, Governor Lee stated during an executive meeting that, "Although the CEO succession process for a number of financial holding company subsidiaries, including bank presidents, is scheduled to take place by the end of the year, it has been found that most financial holding companies have inadequate procedures in place for the succession of subsidiary CEOs."
Specifically, the Financial Supervisory Service pointed out that the eligibility criteria for CEOs established by the Subsidiary CEO Candidate Recommendation Committee (referred to as 'Jachui') of financial holding companies remain ambiguous and lack specificity. In addition, the Service noted that the principles requiring a minimum verification period at each stage of narrowing down candidates are not being properly implemented. Furthermore, according to exemplary governance practices, only some financial holding companies have the Subsidiary Candidate Recommendation Committee share the status of the CEO talent pool or grant the Bank Executive Candidate Recommendation Committee (referred to as 'Imchui') the authority to recommend candidates.
In response, Governor Lee emphasized, "We need to strengthen both transparency and fairness throughout the CEO succession process, including candidate selection, verification and evaluation, and documentation."
Governor Lee also mentioned that the 'Governance Advancement Task Force', in operation since January this year, has been discussing various improvement measures to ensure that the CEO appointment process is not conducted in a closed manner based on specific factions or personal ties. He added, "We ask that financial companies make efforts to operate transparent and fair succession procedures that contribute to enhancing shareholder value."
The Financial Supervisory Service plans to strengthen oversight to ensure that CEO succession at financial companies is conducted according to transparent and fair standards moving forward.
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Governor Lee's comments are drawing attention, as they were made ahead of the year-end personnel changes at major financial holding companies. According to the financial industry, a total of 54 CEOs at affiliates of the five major financial groups—KB, Shinhan, Hana, Woori, and NH Nonghyup—will see their terms expire at the end of this year. In particular, the terms of key bank presidents—Lee Hwanjoo of KB Kookmin Bank, Jeong Sanghyuk of Shinhan Bank, Lee Hoseong of Hana Bank, Jeong Jinwan of Woori Bank, and Kang Taeyoung of NH Nonghyup Bank—will all end on December 31.
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