The financial governance reform plan, a major issue in the financial sector, has been stalled for six months. Initially, the plan was set to be released in March or April, detailing improvements to the CEO appointment process and board operations, but no specific announcement date has been established yet. Critics argue that the delays caused by discrepancies between financial authorities and fine-tuning of regulations are weakening the policy's momentum.
As of July 7, the Financial Services Commission and the Financial Supervisory Service have not finalized the announcement schedule for the governance reform plan. A source from the financial authorities stated, "We have been discussing various options with experts, and the reform plan is in its final stages," but added, "We have not yet coordinated the announcement date with the Blue House."
Given the current situation, there are increasing calls from both inside and outside the authorities to expedite the announcement. Market fatigue is significant, and the longer the announcement is delayed, the less effective it may become. It is currently anticipated that the announcement will occur just before the presidential work report scheduled for the 15th.
The push for governance reform began after President Lee Jae-myung criticized the practice of reappointing financial holding company chairmen as a 'corrupt inner circle' last December. The Financial Services Commission and the Financial Supervisory Service launched a task force for governance reform in January, with a presentation initially scheduled for mid-March, but that was abruptly canceled just hours later, leading to speculation about disagreements among the authorities.
Following this, the financial sector expected the reform plan to be unveiled on July 2, but that too did not materialize. Shortly after Financial Supervisory Service Chairman Lee Chan-jin stated that the announcement would occur before KB Financial Group's shortlist work on July 3, the Financial Services Commission responded that "no announcement schedule has been set," indicating a subtle difference in stance between the authorities.
In the financial sector, it is believed that while a substantial draft has already been prepared, final negotiations over the specific regulatory levels are ongoing. The reform plan is expected to include measures to enhance the transparency of the chairman appointment process, improve the operation of the nomination committee, strengthen board independence, and refine management succession procedures.
However, there is concern among the financial authorities that excessively restricting the autonomy of financial holding companies could reignite debates over government intervention in private financial management, known as 'government-led finance.'
The delay in the announcement has alleviated immediate pressure on financial holding companies. In March, Jin Ok-dong, chairman of Shinhan Financial Group, Im Jong-ryong, chairman of Woori Financial Group, and Bin Dae-in, chairman of BNK Financial Group, confirmed their reappointments. With the new system unlikely to be applied before the upcoming chairman appointment process at KB Financial in November, there is a sense of relief.
A source in the financial sector noted, "The timing of the announcement of the governance reform plan before or after the confirmation of the KB Financial chairman candidate shortlist will inevitably affect the policy's influence," adding, "Missing the announcement timing is diminishing both the credibility and effectiveness of the policy."
* This article has been translated by AI.
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