New dividend payout rule to take center stage at banks’ shareholders meetings

New dividend payout programs are set to take center stage at shareholders meetings next week as banking giants seek to appease shareholders amid growing discontent over new regulations that limit the size of earnings distribution. 

Earlier in January, the policymaking Financial Services Commission advised banks and their holding companies to keep their dividend payouts below 20 percent of net income during the first half of this year to secure enough capital needed to counter impacts of the prolonged COVID-19 pandemic.

Under the FSC’s guidance, KB Financial, Hana Financial, Woori Financial have lowered their dividend payout ratio to 20 percent, except for Shinhan Financial, which determined the ratio at 22.7 percent, exceeding the authority’s 20 percent dividend cap, but down 3.3 percentage points on-year.

In a move to placate shareholders, Shinhan Financial will review changing its articles of association to launch quarterly dividends during its planned meeting slated for Thursday, officials said.

KB Financial and Hana Financial also plan to hold shareholders meetings on Friday and mull over whether to implement interim dividend payouts, while Woori Financial is expected to discuss its plan to use some of its capital reserves as dividends, they added.

Among the key issues at the upcoming shareholders meetings is the extension of some top bankers’ leadership. 

Hana Financial will confirm the reappointment of its incumbent chairman Kim Jung-tai as the next president, who was tipped by board members last month to lead the banking giant for another year. Also, the group will also discuss whether to allow Hana Bank Deputy President Park Sung-ho, who was recently appointed to the CEO post, to serve as a non-executive board member for two years. 

Woori Financial will also approve incumbent Woori Bank CEO Kwon Kwang-seok’s extended leadership at the forthcoming shareholders meeting. Earlier this month, Woori’s CEO nomination committee selected Kwon, who became the bank’s CEO in March last year, as the sole candidate for the next leader. 

Meanwhile, the financial groups are also planning to discuss the appointment of outside directors. 

Shinhan Financial will appoint four new outside directors, recently recommended by its shareholders -- Kwak Soo-keun, a professor of accounting at Seoul National University, Bae Hoon, a lawyer at law firm Orvis that specializes in legal advice for companies related to Korea-Japan relations, Lee Yong-guk, a law professor at Seoul National University and Choi Jae-bung, a professor of mechanical engineering at Sungkyunkwan University, the group said. 

After the shareholders meeting, Shinhan Financial’s board will consist of 12 outside directors.

Woori Financial and KB Financial, meanwhile, has no plans to add new outside directors. 

By Choi Jae-hee (cjh@heraldcorp.com)