Shinhan Financial chief reappointed despite recruiting scandal

Shinhan Financial Group Chairman Cho Yong-byoung on Thursday was reappointed for another three years, despite disapproval of the largest shareholder and an ongoing legal dispute.

The appointment was approved at the group’s annual shareholders meeting in Seoul which was livestreamed on the its website due to the COVID-19 spread.

Cho will retain his position until March 2023, with no apparent signs of dissent from the attending shareholders.

“I will make the best efforts to minimize customer damages and settle the (derivative-linked fund) scandal as soon as possible,” Cho said.

He was referring to the group’s affiliate Shinhan Investment which has come under fire for the extensive selling of the high-risk DLF products last year.

Cho also pledged that Shinhan Financial, as the nation’s leading financial group, will fully cooperate in the country’s continuing struggles to overcome the economic fallout of COVID-19.

In December last year, the group’s corporate governance and chairman candidate recommendation committee unanimously suggested incumbent Chairman Cho as the sole candidate for the position.

The National Pension Service, the country’s public pension fund operator and the largest shareholder, raised objection to his likely reappointment.

Last week, the NPS’ nine-member special committee on fiduciary responsibility vowed to use the fund’s 9.76 percent voting rights to vote against Cho’s second term. It also disapproved of Woori Financial Group Chairman Sohn Tae-seung, who sealed his reappointment on Wednesday.

The key reason of boycotting is the two banking chiefs’ liability in undermining corporate value and violating shareholders’ rights, according to the NPS.

Cho is facing potential legal risks along the way as he was handed down a suspended six-month jail term by a lower court in January this year over his alleged role in Shinhan Bank’s recruiting scandal. He will attend the first trial at the appellate court on April 8.

As the case is still pending, the latest lower court ruling holds no binding power on Cho’s governance but has been posing pressure in terms of credibility.

Shinhan Financial logged 3.4 trillion won ($2.8 billion) in net profit last year, outrunning rival KB Financial Group and maintaining its No. 1 position in the market.

By Bae Hyun-jung (tellme@heraldcorp.com)