Governance reform of financial institutions drifts... Discord between FSC and FSS only deepens

News1 [Financial News] The financial authorities' plan to improve the governance structure of financial holding companies has been adrift for several months. Critics point out that the effectiveness of the policy is weakening, as major financial holding company chairmen have succeeded in securing consecutive terms, contrary to public pledges to eliminate the "corrupt inner circle" within the financial sector. Furthermore, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) are showing differences of opinion regarding the timing of the announcement, creating an atmosphere where the discord is only growing.
According to the financial sector on the 8th, the FSC is continuing its final preparations ahead of the announcement of the governance improvement plan. They are currently coordinating the announcement date with the Blue House. While there had been widespread speculation in the financial sector that the improvement plan would be announced before the Presidential briefing on the 15th, the atmosphere suggests that it is increasingly likely to be postponed again.
Originally, the FSC planned to release the improvement plan last March, but it has been delayed for several months. Meanwhile, some point out that the momentum for corporate governance reform has weakened as the chairmen of major financial holding companies have successfully secured consecutive terms without difficulty one after another. Last March, Shinhan Financial Group Chairman Jin Ok-dong, Woori Financial Group Chairman Lim Jong-ryong, and BNK Financial Group Chairman Bin Dae-in all succeeded in securing consecutive terms.
For KB Financial Group Chairman Yang Jong-hee, a green light has been given for his reappointment as no improvement plan, which could have acted as a variable, was released. On the 3rd, the KB Financial Group Chairman Nomination Committee finalized a shortlist of six candidates for the next chairman, officially beginning the selection process. There is also criticism that the months of delayed announcements only highlighted a lack of coordination between the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS).
A prime example is FSS Governor Lee Chan-jin's statement at a press conference on the 22nd of last month that the corporate governance improvement plan would be announced before the KB Financial Group shortlist was finalized. At the time, there was a reaction from the FSC stating, "We do not understand why Governor Lee said that. " Even when the announcement of the improvement plan was abruptly canceled last March after being previously scheduled, rumors of disagreements between the Financial Services Commission and the Financial Supervisory Service were circulating.
With the terms of the heads of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) set to expire simultaneously at the end of December, there are calls for the authorities to expedite the announcement. Critics point out that market fatigue is already significant, and to enhance the effectiveness of the policy, the improvement plan must be released by the end of the year, when the appointment of bank presidents is concentrated. The five major banks are expected to begin the full-scale appointment process starting in September, three months before the terms expire.
Given that the chairman of the financial holding company effectively holds the power to appoint bank presidents, there is a possibility that the reappointment of these presidents could also fall under the scrutiny of the corporate governance improvement plan. A financial industry official stated, "It is true that the presence of the governance improvement plan has weakened as it has not been announced for several months," adding, "We need to wait and see, as it could influence the selection of bank presidents.
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zoom@fnnews.com Lee Ju-mi Reporter