Citibank CEO’s bid for KB chairman post not all bad

The first thing people noted about Citibank Korea CEO Ha Yung-ku’s recent announcement that he would join the race for chairman of KB Financial Group was that it marks the first time here for a serving financial institution head to officially run for a seat at a rival bank.

Ha still has 17 months remaining in his term, and some Citibank employees were left pondering whether it was proper for their president to have made such a decision.

Despite the initial confusion, analysts believe Ha ― who is serving his fifth consecutive term at Citibank ― would actually be a good match for the nation’s fourth-largest financial holdings firm, calling it a “win-win” situation.

“KB has been looking for someone from the outside who can clear up the mess from the recent power struggle (between former KB Financial chairman Lim Young-rok and former KB Kookmin Bank CEO Lee Kun-ho),” an official from the Korea Development Bank told The Korea Herald. 

As many as five of eight shortlisted candidates are former or incumbent KB officials.

Ha, he said, would be a “breath of fresh air.”

Last month, the heads of KB Financial and KB Kookmin stepped down following government sanctions after the two engaged in an apparent power struggle. The two were also reprimanded for their roles in data leaks.

The internal dispute significantly damaged KB’s reputation and consumer confidence. Consequently, both the authorities and KB are looking for someone who can revitalize the institution’s image.

Ha, who is 61 ― a relatively young age in the industry ― may be able to utilize his expertise in domestic finance while serving at the helm of KB Financial.

“He was chief of U.S.-based Citibank for 15 years, the longest term in history as a bank CEO among local financial organizations, which, despite some of the criticism against him, means a lot,” said one industry watcher, declining to be identified.

In 2010, the top executive went on to become the Citigroup Korea chairman. He became the first CEO in Korea to serve as the chief of both a holdings firm and a bank unit at the same time.

Citibank employees, however, appeared taken aback by Ha’s sudden announcement.

“We were truly quite surprised when he sent around the email that he would be joining the bid,” a Citibank source said.

He added that workers also felt there may not be someone good enough to replace Ha, as few executives at the bank have the level of diversified experience in the banking business as Ha does.

Not all were supportive, as some pointed out that Citigroup’s net profit plunged following Ha’s inauguration as group chairman. Others, however, conceded that the entire financial sector has been suffering.

Citigroup Korea’s net profit slid almost 50 percent from 441.3 billion won ($411 million) in 2011 to 240 billion won in 2013. As a result, Citibank decided in June to shed 650 employees through a voluntary retirement program, which accounts for about 15 percent of the total staff.

A Citibank spokesman said the company does not expect to be hit too hard if Ha leaves, as the group routinely trains at least two high-ranking officials to be prepared for sudden leadership vacuums.

By Suk Gee-hyun (monicasuk@heraldcorp.com)