Lee Chan-jin, Governor of the Financial Supervisory Service, Calls In Bank Holding Company Chairs: "Don't Entrench Yourselves Through CEO Appointments"

[Financial News] Lee Chan-jin, governor of the Financial Supervisory Service, summoned the chairs of bank holding companies on the 23rd and emphasized, "Since early this year, financial authorities and the financial sector have considered ways to avoid CEO entrenchment and fairly improve succession procedures. Please work to ensure that subsidiary CEOs are appointed through transparent and fair procedures."
Lee Chan-jin held a meeting that morning at the Financial Supervisory Service's headquarters in Yeouido, Seoul, with the chairman of the Korea Federation of Banks and the chairs of the eight major bank holding companies. He reiterated the need for fairness and transparency in the process of appointing chief executive officers of financial company subsidiaries and called on them to promptly address any shortcomings before launching the appointment process.
Referring to the principle of impartiality free from personal interests, known as "daegongmusa," Lee Chan-jin reiterated, "The CEO appointment process must be operated as a process for selecting the right person based on ability, without being swayed by particular factions or personal relationships." He also mentioned specific CEO qualifications and minimum verification periods for each stage of the evaluation, adding, "Holding companies that have not yet established basic and essential procedures must promptly address any shortcomings before launching the appointment process."
Lee Chan-jin also said that holding companies' committees recommending candidates for subsidiary CEOs must ensure that their subsidiaries' committees recommending executive candidates play a substantive role in line with the intent of the Act on Corporate Governance of Financial Companies. Specifically, he called for sufficient information, including a standing pool of CEO candidates, to be provided and for the opinions of committee members to be reflected when CEO candidates are evaluated.
Cho Yong-byoung, chairman of the Korea Federation of Banks, responded, "In keeping with the standing of bank holding companies in the financial industry, we will actively cooperate on balanced regional development, improvements to corporate governance, and stronger internal controls."
The Financial Supervisory Service said that the chairs of the bank holding companies also pledged to carefully review areas for improvement in the process of appointing subsidiary CEOs.
Earlier, at an executive meeting of the Financial Supervisory Service on the 15th, Lee Chan-jin also emphasized fairness and transparency in the appointment of CEOs of financial holding companies' subsidiaries. With the year-end personnel season approaching while the authorities' plan to improve corporate governance remains unreleased, he appears to be issuing successive messages to refocus attention on the issue.
Meanwhile, Lee Chan-jin urged officials to pay particular attention to organizational culture so that internal controls operate effectively, saying, "Recently, the number and amount of financial incidents involving embezzlement, breach of trust, and 'gasi' have continued to rise, and the scale of these incidents has also grown."
According to the Financial Supervisory Service, financial incidents in the banking sector increased from 33 cases totaling 69.69 billion won in 2023 to 47 cases totaling 170.82 billion won through July this year. External fraud, such as the falsification or alteration of income and employment certificates, as well as incidents involving overseas branches that are difficult for head-office internal controls to reach, also increased.


[email protected] Eun-hyo Cho Reporter