[Editorial] Financial Holding Companies Inspected After President's Criticism—This Is 'Government Intervention'

Right after President Lee Jae-myung publicly criticized the process of appointing FHC chairmen, the financial authorities stated they would commence on-site inspections of these companies. While regular inspections are not problematic in themselves, the timing—directly following the president’s remarks—makes it difficult to avoid allegations of political interference.
During a business report by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) on the 19th, President Lee remarked, "When left unchecked, a corrupt inner circle forms and a select few continue to wield control as they please. Some serve as bank presidents, then as chairmen, maintaining their grip for 10 to 20 years. Is there any solution to this?" In response, Lee Chanjin, Governor of the FSS, stated, "We are preparing to launch inspections of FHCs where issues have been raised."
Following this, speculation arose in the financial sector that the FSS would soon begin inspecting the process for selecting the next chairman of BNK Financial Group. Governor Lee Chanjin had already commented in October and again on the 1st of this month that some FHC chairmen were allegedly planting their own people on the board to secure reappointment.
It is true that the reappointment of FHC chairmen has become an entrenched practice in the financial sector. Kim Jung-tai, former chairman of Hana Financial Group, served four consecutive terms over ten years, while Yoon Jong-kyu, former chairman of KB Financial Group Inc., maintained his position for nine years through three reappointments. There has been ongoing criticism that some chairmen have influenced board composition to facilitate 'self-reappointment.'
Some chairmen, after being reappointed, have continued outdated business practices that rely on interest margins rather than pursuing financial innovation, drawing criticism. From the perspective of the underlying issue, the president’s concerns are not entirely unfounded. However, the legitimacy of raising the issue and the method of resolving it should be considered separately.
BNK Financial Group and Shinhan Financial Group Co., Ltd., among others, have already selected their final chairman candidates through their Executive Candidate Recommendation Committees. If there were problems with these committees, the financial authorities should have issued warnings and demanded corrections in advance, following proper procedures and regulations. Initiating on-site inspections at the final stage of the appointment process, seemingly influenced by the president’s remarks and potentially affecting the outcome, is difficult to accept. Such abnormal intervention is precisely what constitutes 'government intervention' in finance.
Moreover, if there have been structural issues in the appointment of FHC chairmen in the past, a significant portion of the responsibility lies with the financial authorities. The Act on Corporate Governance of Financial Holding Companies and the Financial Holding Companies Act stipulate regulations on the qualifications of major shareholders and the procedures for appointing chairmen. The financial authorities should have continuously monitored whether these appointments were conducted transparently and fairly, in accordance with these laws and their own supervisory regulations.
Nevertheless, the financial authorities have not demonstrated that they have fully upheld their supervisory responsibilities. In reality, numerous retirees have parachuted into key positions at financial companies, forming close-knit relationships. It is questionable how convincing it is for the authorities, who have long overlooked such issues, to now scrutinize the Executive Candidate Recommendation Committee process and launch on-site inspections.
Government intervention in finance distorts the efficient allocation of resources, undermines competitiveness, and fosters moral hazard and insolvency. The financial authorities must restore trust in financial supervision by establishing clear and consistent standards for governance and chairman appointments, thereby enhancing market predictability. Above all, the values of consumer protection and financial sector innovation must not be overshadowed by political controversy.