President Lee Jae-myung criticized the practice of financial holding group chairmen serving consecutive terms, saying "a corrupt inner circle forms and a small number take turns exercising control," but with Yim Jong-ryong of Woori Financial Group finalizing another term, all major financial holding group chairmen whose terms were set to expire under the Lee administration have secured new terms. In the past, when an administration changed, there were many cases of financial holding group chairmen being replaced, but some analysts say the Lee administration is not yet in a position to intervene in appointments of top executives (CEOs) at financial companies.
According to the financial sector on the 30th, Shinhan Financial Group Chairman Jin Ok-dong, Chairman Yim Jong-ryong, and BNK Financial Group Chairman Bin Dae-in all won new terms. Until now, when administrations changed, financial holding group chairmen were often replaced. Right after the launch of the Yoon Suk-yeol administration, former Shinhan Financial Group Chairman Cho Yong-byung and former Woori Financial Chairman Sohn Tae-seung, who had been seen as likely to win new terms, stepped down, and former KB Financial Chairman Yoon Jong-kyu also gave up a fourth term.
At the time, some in the presidential office were said to have shown strong interest in appointments of financial holding group CEOs. Lee Bok-hyun, former head of the Financial Supervisory Service and considered a close aide to the former president Yoon, also reflected the presidential office's intent by publicly expressing opposition to a specific financial holding group chairman serving another term.
By contrast, under the Lee Jae-myung administration, the secretary for growth economy (formerly the secretary for economy and finance), who conveys the Blue House's intentions to private financial firms, has long been vacant, leading those in the financial sector to say the structure makes it hard to relay the Blue House's views to financial companies. Financial Supervisory Service (FSS) Governor Lee Chan-jin, a close aide to the president, is taking aim at financial holding group chairmen's "self-renewals," but it is said this is not a situation involving intervention at the Blue House level.
A senior official in the financial sector said, "In the past, some close aides to the president were deeply involved in CEO appointments at financial firms, but under the Lee Jae-myung administration that is not the mood yet."
On top of that, with local elections next year, a change in financial company leadership could disrupt key financial pledges of the current administration, such as growth finance and inclusive finance, a factor seen as being considered. The four major financial holding groups—KB, Shinhan, Hana, and Woori—are pursuing an expansion of productive and inclusive finance in line with the government's policy stance. The four groups plan to invest 400 trillion won over five years in those areas, but schedules could slip if CEOs are replaced.
In the financial sector, attention is on KB Financial, which will select its next chairman in November next year. While many in the sector see strong odds for another term, a variable is that the financial authorities are pushing governance reforms to block CEOs from "self-renewing" their terms.
The financial sector warns that if administrative control intensifies, a culture of political lineup-building could become rampant inside financial firms and undermine foreign investors' trust in Korean finance. Overseas institutional investors are major shareholders in domestic financial holding groups. If financial companies focus only on reading the political winds and lose growth momentum, the real economy could also take a hit.
Kim Dae-jong, a professor at Sejong University's business school, said, "Only when the government and banks build a cooperative partnership, rather than an adversarial structure, can inclusive finance be realized in the true sense."