New plan aimed at ensuring transparency in management lineup
Shinhan Financial Group decided to nominate several candidates for chief executives of the group, starting next month, under its effort to raise transparency in management structure.
Board members of the nation’s third-largest financial group reached a consensus on the plan initiated by group chairman Han Dong-woo on Thursday.
Shinhan also decided to launch the “group management conference” in September. “Out of the 11 members of the conference, several figures could be designated or recommended as potential CEOs of the financial group,” a spokesman said.
He said the conference will be an upgraded entity from the current “CEO meeting,” which has been held every Wednesday.
The 11 members will likely be composed of CEOs of affiliates, such as Shinhan Bank, Shinhan Card and Shinhan Investment Corp., as well as several external figures.
Group spokesmen said details will be mapped out in the coming weeks, stressing that the scheme is mainly aimed at minimizing irregularities resulting from power struggling among executives.
“By designating successors in advance, we could prevent several top executives from engaging in internal feud,” a spokesman said.
Han, who took office this year, has faced the daunting challenge of restoring the group’s reputation and mending in-house frictions.
The former vice chairman of the group’s insurance unit was tapped as the next chairman of the nation’s third-largest financial group in February.
Shinhan has suffered a management crisis due to allegations surrounding its top three executives, who eventually resigned in the fourth quarter of 2010.
The group’s chairman, president and bank CEO quit in turn for alleged irregularities ― in an unprecedented case in the local market.
Former president Shin Sang-hoon and former bank CEO Lee Baek-soon have been indicted by the prosecution, while former chairman Ra Eung-chan was reprimanded by financial regulators.
On the same day, the Financial Supervisory Service decided to take punitive action against Shinhan Bank for irregular business activities at a meeting of the Sanction Review Committee.
The irregularities include negligent loan screening practices and careless management of customers’ deposits, according to FSS officials.
They said the bank’s irregularities are closely concerned with mismanagement by Shinhan Financial’s former top three executives including ex-chairman Ra.
Following an intensive probe on the nation’s third-largest financial group in the wake of an embezzlement scandal involving the three former executives in late 2010, regulatory inspectors conducted another inquiry into the bank for some employees’ wrongdoings in the second quarter of 2011.
The recent inspection focused on a Dongah Construction manager’s embezzlement of company funds totaling about 89 billion won ($82 million), which had been entrusted to Shinhan.
By Kim Yon-se (
kys@heraldcorp.com)
