KB Financial Group has announced the names of eight candidates for the top post of its holding company, following the exit of former chairman Lim Young-rok in the wake of a severe feud with the head of the group’s flagship Kookmin Bank.
The eight ― five former KB executives and three outsiders ― were short-listed from a pool of 84 potential candidates and will be narrowed further down to four by Oct. 16. The group’s chairman selection committee will then choose a single candidate, whose appointment is subject to approval by its board and shareholders.
The nation’s largest financial group by assets is choosing its new chief because Lim, a former vice finance minister, was ousted in the wake of an intense boardroom feud with the ex-head of Kookmin Bank Lee Kun-ho, who also resigned.
Looking at the candidate short list, which includes no incumbent or retired government officials, it seems that the government is staying away, at least outwardly, from the selection process.
The decision by Lee Chul-hwi, the chief executive of the Seoul Shinmun newspaper and a former senior Finance Ministry official, to turn down his place on the short list also brightens the prospects for ending the revolving-door appointments that have plagued the financial group.
The conflict between Lim and Lee stemmed from the former’s push to change the operator of Kookmin Bank’s online banking system, but its root cause was that Lim, like his predecessor who was a close friend of then-President Lee Myung-bak, was installed by the government.
This is why ensuring the government’s hands-off stance from the selection of Lim’s successor is important. It should no longer handpick the head of a financial group in which it does not have a stake and foreign investors hold 60 percent of the shares.
The leadership crisis at KB and the ongoing selection of its new chairman also should prompt discussions on the governance reform of KB and other financial groups.
Besides the revolving-door appointments, the vague definitions of the roles and authorities of the chairman of its holding company and the head of its flagship unit were blamed for the crisis at KB.
KB and the three other financial groups ― Shinhan, Woori and Hana ― have experienced similar leadership feuds since they launched the holding company system, starting with Woori in 2001. Later, Woori precluded such conflicts by having the chairman of its holding company double as the head of its flagship bank.
KB may benchmark Woori’s case in reforming its governance system. Both the government and the National Assembly also should start discussions on how to enhance the efficiency and transparency of the nation’s financial holding companies, whose problems have been exposed by the fiasco at KB.
