Lee Chan-jin, head of the Financial Supervisory Service, has urged the chairs of bank holding companies to ensure fairness and transparency in CEO succession processes. He emphasized the board's responsibility for candidate selection, verification, and evaluation as oversight intensifies ahead of year-end CEO appointments.
On October 28, Lee held a meeting at the Financial Supervisory Service with the chairs and outside directors of eight bank holding companies, including KB, Shinhan, Hana, Woori, NH Nonghyup, BNK, iM, and JB. He called for enhanced transparency and fairness in the CEO succession processes of subsidiaries, stressing that the board must fulfill its responsibilities throughout the entire process, from candidate selection to verification and record-keeping.
This follows his previous directive to bank holding company chairs last month, where he emphasized merit-based appointments. At that time, he urged against favoritism based on factions or personal relationships and instructed that the selection and evaluation of candidates be checked against predetermined criteria after the appointments are made. This highlights the board's role in overseeing adherence to appointment principles.
Meanwhile, bank holding companies are accelerating their year-end appointment processes. Hana Financial confirmed its shortlist of CEO candidates for six subsidiaries, including Hana Bank, Hana Securities, and Hana Card, on October 26. Shinhan Financial also selected its first shortlist of candidates for the positions of Shinhan Bank and Jeju Bank on October 27. iM Financial, which is in the process of selecting its next chair, finalized a long list of six candidates on the same day.
There is also a movement to expand the participation of subsidiary boards in the CEO succession processes. This involves enhancing procedures so that subsidiary boards can be involved in candidate recommendations and evaluations alongside the holding company. Hana Financial has allowed its bank executive candidate recommendation committee to provide input on the candidate pool, while Shinhan Financial has strengthened the role of its bank candidate recommendation committee in recommending and interviewing candidates.
However, for the expanded participation in the process to lead to effective oversight, the opinions presented during candidate recommendations and evaluations must be reflected in the final appointments. It is also crucial to determine whether the reappointment of current CEOs is based on objective criteria established in advance.
According to the results of board votes, out of 993 proposals from the eight bank holding companies last year, 983 (99.0%) were approved as originally submitted. Only nine were amended, and one was postponed. While it is difficult to assess the oversight function solely based on the approval rate, it is essential to examine the discussions and reviews that took place during the proposal evaluation process.
In the follow-up checks by the Financial Supervisory Service, it will be important to provide evidence that candidate selection and evaluation were conducted according to established criteria. The key issue is whether the board of directors played a substantive role in the candidate review and final decision-making process, rather than merely approving the succession procedures in a formal manner.
Additionally, during the meeting, Lee called for improvements in IT security, social responsibility, and internal controls. He cautioned against viewing IT security investments merely as costs and emphasized the need for enhanced management and oversight from headquarters to prevent financial incidents at overseas branches. He also urged consideration of accessibility for vulnerable groups, such as the elderly, during the process of reducing bank branches.
* This article has been translated by AI.
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