Lee Chan-jin Again Warns: “Transparency and Fairness Must Be Strengthened in Financial CEO Appointments” (Roundup)

[Financial News] On the 28th, Lee Chan-jin, governor of the Financial Supervisory Service (FSS), called on the chairs of eight bank holding company boards to “strengthen transparency and fairness in the selection of candidate pools, vetting and evaluation, recordkeeping, and other aspects” of appointments to CEO positions at financial subsidiaries. Shinhan Financial Group, Hana and other financial holding companies have begun the appointment process ahead of year-end changes to the terms of bank presidents and other financial affiliate CEOs. A month earlier, Lee had also summoned the heads of the eight financial holding companies and warned them, “Do not entrench yourselves.”
At a regular meeting that morning at the FSS headquarters in Yeouido, Seoul, with the board chairs of eight bank holding companies—KB Kookmin, Shinhan, Hana, Woori, NH NongHyup, BNK, iM and JB—Lee said, “The governance reform plan currently being developed includes measures to ensure that outside directors have the authority and the conditions they need to fully carry out their oversight of management.” He added, “For institutional changes to lead to substantive improvements in corporate governance, they must be backed by the expertise and sense of responsibility of outside directors.” Lee said, “Past cases show that outside directors have very rarely voted against agenda items. There have also been cases where the board did not conduct sufficient reviews even of major issues.” He added, “I hope you will make decisions on key management matters, including business diversification and executive compensation and performance evaluation (KPIs), that serve the long-term interests of the company and its shareholders.” Last year, of the 993 resolutions considered by the eight bank holding companies, all but 10—nine approved with amendments and one deferred—were approved as originally proposed.

Lee said, “I understand that succession procedures for CEOs of financial holding company subsidiaries are now well underway,” and added, “I urge you to further strengthen the transparency and fairness of those procedures, fully reflecting the intent of the governance reform plan.” After subsidiary CEO appointment processes at Hana Financial Group and other companies began to gather pace, Lee also ordered an after-the-fact review of the transparency and fairness of the process on the 26th.
Lee Seong-yeop, an outside director of JB Financial Group, spoke with reporters after the meeting. Asked about Lee’s call for fairness and transparency in CEO succession procedures, he explained, “The point is to conduct the process openly, without being bound by special interests such as school ties, regional ties or personal connections.” This was understood to mean that personal relationships should not influence the selection and vetting of CEO candidates, and that objective criteria should be applied.
Regarding recent hacking incidents in the financial sector, Lee said, “I understand that there was a widespread hacking incident involving a major financial investment firm yesterday,” and called on financial companies to “manage their IT assets rigorously and establish an autonomous defense system that identifies security vulnerabilities.” A personal information leak at Mirae Asset Life Insurance was confirmed on the 26th, and a hacking incident was also reported at Daishin Securities.
The chairs of financial holding company boards also agreed on the importance of responding to hacking incidents. Oh Myeong-suk, chair of the BNK Financial Group board, said after the meeting, “We exchanged many views on IT security, which has recently been one of our greatest concerns,” adding, “Since this is now a matter of survival, practical and effective response measures must be put in place.” She added, “It was an opportunity to communicate, share views from the field and understand one another’s circumstances.”
The outside director also said, “AI hacking seems to be the biggest issue,” adding, “Every financial holding company is on alert, and awareness has risen considerably at the board level as well.” He stressed the importance of security measures, saying, “The fact that there has not yet been any hacking damage does not mean we have responded well.”
[email protected] Jo Eun-hyo, Lee Hyeon-jeong Reporter