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Ahead of the replacement of the CEO of a domestic financial company early next year, a ‘parachute’ debate is brewing in the financial sector.
In addition to the recent ‘government debate’ which reduces the autonomy of the market, such as the order of the financial authorities to refrain from raising deposit rates, the general financial sector at the end of the year is in a turbulent mood.
Comments from Lee Bok-hyeon, head of the Financial Supervisory Service, targeting Woori Financial Group
The financial authorities that order commercial banks to manage the difference in the interest rate between deposit and loans appropriately to protect financial consumers can be interpreted as a legitimate order that is included in the category of determining the direction of government policy.
However, opposition to raising interest rates on deposit savings and installments at a certain time and moving to appoint an external person for the CEO of a particular financial company can infringe on the autonomy of the financial sector as a whole.
In particular, tensions in the financial sector are increasing at the moment as ‘greeting is a message’.
Lee Bok-hyeon, head of the Financial Supervisory Service. random news
Recently, an unusual comment came from Director Lee Bok-hyun, the first head of the Financial Supervision Service of the prosecution.
Director Lee, who was known as a member of the ‘Yun Seok-yeol Division’ when President Yoon Seok-yeol was a prosecutor, was exceptional from the time he was appointed head of the Supervisory Service Financial.
Director Lee said in a meeting with the chairman of the board of directors of the bank holding company on the 14th of last month, “Make special efforts to ensure that the appointment of the CEO is made transparently and fairly in accordance with a management succession process reasonable.”
At first glance, it may sound like a reasonable statement as a monetary authority, but the problem was the timing.
This is because, on the 9th of the same month, five days earlier, the Financial Services Commission decided to impose a heavy disciplinary penalty on the Chairman of Woori Financial Group, Son Tae-seung, for preventing the redemption of a lime fund that took place during his time as Chief Executive Officer. of Woori Bank in the past, and called it a ‘responsibility notice’.
Son Tae-seung, chairman of Woori Financial Group. Courtesy of Woori Financial Group
On the 10th, the day after the decision on severe punishment for Chairman Sohn, Director Lee said, “Financial authorities and financial institutions must cooperate closely in the face of rapid fluctuations in the market. ” I pressed the president’s hand. who accepted it.
As it overlapped with the comments made in the meeting with the chairman of the board of directors of the bank holding company four days later, the financial sector interpreted the comment as putting indirect pressure on Son to resign.
After that, Chairman Sohn, who was severely punished in relation to the DLF in 2020, filed a lawsuit for the cancellation of the disciplinary action, and had already won the first and second trials. The second division of the Supreme Court confirmed the lower court on the 15th, canceling the Financial Supervisory Service’s disciplinary warning against Son.
After the inauguration of the Yoon Seok-yeol administration, the first financial CEO replacement period ‘attention’
The financial sector believes that the financial authorities continue to make pressure comments to block the possibility of a second term of Chairman Son, which is about to end in March next year, in advance.
A financial sector official said, “The era of large-scale CEO replacement of financial companies began with the Yoon Seok-yeol administration,” and “parachute personnel appointments, such as the appointment of external personnel, are appearing everywhere.”
In fact, other financial holding companies are in a similar position.
Son Byeong-hwan, chairman of NH Nonghyup Financial Group. Provided by NH Nonghyup Financial Holdings
Son Byeong-hwan, chairman of NH Nonghyup Financial Holdings, was an insider and likely to be reappointed. Normally, Nonghyup Financial’s chairmanship was guaranteed for another year after the two-year term.
In particular, few immigrants doubted Chairman Son’s extension of tenure, considering that he has expertise in digital finance and that he has achieved the highest performance of Nonghyup Finance.
However, on the 12th of this month, NH Nonghyup Financial Group held an Executive Candidate Recommendation Committee (appointment committee) and recommended Lee Seok-joon, the former head of the Government Policy Coordination Office, as the only candidate to succeed Chairman Sohn.
Former chief Lee served as general manager of the policy advisory group and special adviser to the elected during President Yoon’s presidential campaign.
Cho Yong-byeong, chairman of Shinhan Financial Group. Provided by Shinhan DS
Shinhan Financial Group chairman Cho Yong-byeong, who was likely to serve a second term, suddenly resigned shortly before the decision on the candidate for the next chairman.
Chairman Cho was confirmed innocent by the Supreme Court in relation to illegal recruitment in June this year and escaped the judicial risk, and is expected to be reappointed amid the evaluation that he has strengthened Shinhan Financial’s competitiveness.
However, Chairman Cho suddenly announced his intention to resign, and the Chairman Candidate Recommendation Committee (Nomination Committee) recommended Shinhan Bank President Jin Ok-dong as the only candidate for the next chairman on the 8th.
Yoon Jong-won, CEO of Industrial Bank of Korea (IBK). random news
Controversy is growing as a former bureaucrat has been tipped for the post of IBK Industrial Bank CEO Yoon Jong-won, whose term ends in January next year.
The name of Jeong Eun-bo, the former head of the Financial Supervisory Service, is coming up and down as a successor. Jeong is a former financial bureaucrat who has served as director of the Financial Services Commission’s Office of Monetary Policy, secretary general and vice chairman.
The National Union of the Financial Industry and the union of the Industrial Bank of Korea are clamoring, “There is no precedent that the former head of the Financial Supervisory Service has become the head of the IBK, a supervised institution.
Kang Seok-hoon, chairman of KDB Industrial Bank. Reporter Hwang Jin-hwan
The Yoon Seok-yeol administration previously appointed Kang Seok-hoon, a former politician, as chairman of KDB Korea Development Bank in June.
Chairman Kang served as a member of the 19th National Assembly, Senior Secretary to the President for Economic Affairs in the Park Geun-hye administration, and special policy advisor to President-elect Yoon Seok-yeol. In particular, the work to fulfill President Yoon’s presidential election promise to relocate the headquarters of the Korea Development Bank to Busan is progressing steadily.
BNK Financial Group, which is the only financial holding company in Korea where an insider has served as chairman, recently revised its CEO management succession rules so that outside personnel can be included in the list of candidates for the chairmanship.
Some in the financial sector continue to question whether it is a stop-gap operation for the input of government ‘parachute’ personnel.
An order to refrain from raising deposit interest rates… In the financial world, “it doesn’t make sense”
Financial Services Commission Chairman Kim Joo-hyun (center) poses for a commemorative photo with the chairmen of the five major financial holding companies at the Seoul Government Center in Jongno-gu, Seoul on July 21. From left, Hana Financial Group Chairman Ham Young -joo, Woori Financial Group Chairman Son Tae-seung, Financial Services Commission Chairman Kim Joo-hyun, KB Financial Group Chairman Yoon Jong-gyu, and Shinhan Financial Group Chairman Cho Yong-byeong. Reporter Park Jong-min
The ‘notification’ of financial companies is not limited to CEO personnel.
Recently, in a meeting with bank heads, Financial Services Commission Chairman Kim Joo-hyun directly ordered, “There is concern that money will be concentrated in the banking sector, causing a lack of liquidity in the secondary financial sector. Banks should consider ways to reduce the burden on the economy in the process of responding to rising interest rates.” he did
In fact, with the ‘order to refrain from raising interest rates on deposits’, deposit products with an annual interest rate of 5% disappeared all at once.
Until last month, there were few deposit products that exceeded 5% in the five major commercial banks, but now all of them are below 5%. As of the 16th, interest rates for large time deposits at the five major banks ranged from 4.44 to 4.88 percent, down about 0.22 percentage points from the end of last month (5.10 percent).
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The Yoon Seok-yeol government promised to stop excessive ‘interest trading’ in the banking sector by raising the deposit rate and lowering the loan rate through proper control of the loan-deposit interest rate. However, as the interest rate on deposits in the market rose due to the sudden increase in the base rate by the Bank of Korea, his stance changed 180 degrees.
An official from a commercial bank said, “It was the government that instigated competition in deposit rates by linking banks to increased lending rates while institutionalizing the disclosure of the deposit-deposit interest rate differential.
This is the reason why the backlash is intensifying around the financial sector regarding the debate about ‘parachute’ personnel and ‘financial governance’.
Another official in the financial sector said, “It is not an exaggeration to say that financial companies are only paying attention to the exact intentions of the government at the moment,” and predicted, “If the debate about input parachute personnel becoming a reality, resistance. it will be tremendous.”
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