KB, Shinhan, Hana, and Woori Financial Group are set to hold their regular shareholder meetings this month and appoint 9 new outside directors. The key theme for this restructuring of outside directors is 'strengthening internal controls.' The financial groups have established an internal control committee and have strengthened diversity by recruiting not only professors and finance professionals but also experts in the digital field and women.
According to the financial sector on the 12th, the terms of 23 out of 32 outside directors of the four major financial groups will end after this month's regular shareholder meeting. The financial groups plan to appoint 9 new outside directors, aiming for significant changes in their boards.
In particular, this year the financial groups have been busy recruiting internal control experts in response to the demands of financial authorities emphasizing strengthened internal controls. This follows a series of issues regarding inadequate internal control systems in the financial sector. To this end, all four major financial groups plan to establish internal control committees at this meeting. They intend to clarify the supervisory role by setting up an internal control control tower within the board.
A glance at the newly recommended outside directors also emphasizes diversity. This move is interpreted as a response to criticism that the board's fundamental functions of oversight and checks have been undermined, leading to a financial disaster amounting to 260 billion won across the entire financial sector last year.
Woori Financial Group, which is addressing a scandal involving inappropriate loans to relatives of former Chairman Son Tae-seung, particularly emphasizes internal controls in the appointment of outside directors. Out of a total of 7, 5 members' terms are ending, prompting a major overhaul that will replace 4 directors. The candidates for new outside directors include Lee Young-seob, a professor at Seoul National University Graduate School of International Studies; Lee Kang-haeng, former vice chairman of Korea Investment Holdings; Kim Young-hoon, former CEO of Daou Technology; and Kim Chun-soo, former representative of EUGENE Corporation. They are expected to include not only individuals with high understanding of the financial industry but also experts in digital technology and ethical management to drive internal control innovation.
KB Financial Group will see the terms of 6 outside directors expire, with two candidates recommended for new outside directors: Cha Eun-young, a professor of economics at Ewha Womans University, and Kim Sun-yeop, CEO of Lee Jung Accounting Corporation. Shinhan Financial is planning to appoint 2 new outside directors, with candidate Jeon Myo-sang, a third-generation Korean resident in Japan, holding a certified public accountant qualification. If Jeon's appointment is confirmed, Shinhan Financial will consist of 4 female outside directors. Another candidate, Yang In-jip, is a corporate figure who has served as CEO of a non-life insurance company and as the president of HiteJinro's overseas business.
Financial authorities have also enabled programs to cultivate outside directors to strengthen the internal control capabilities of financial groups. Last month, financial authorities and the five major financial groups signed a multilateral memorandum of understanding for 'cultivating and enhancing the capabilities of outside directors.' In fact, the Financial Education Institute has recently offered not only its existing training programs for new outside directors but has also opened a 'pre-outside director course.' This is the first time such a preliminary course has been offered, aimed at providing tailored training programs for prospective outside directors interested in participating.
An official from a financial group noted, 'Unlike before, the expertise of outside directors is increasingly being demanded.' They added, 'Starting this year, a structure of accountability is being introduced for financial companies, which means the board has many more matters to oversee.'