The Financial Supervisory Service, which has raised issues with the extension of financial holding company chairmen's terms, will release the results of its inspection into BNK Financial Group as early as next month. BNK Financial plans to put the agenda item of Chair Bin Dae-in's extension on the agenda at the March shareholders meeting, and the move is seen as a plan to release the inspection results before the meeting so shareholders can make their choice.
According to the financial authorities on the 13th, the Financial Supervisory Service (FSS) extended the inspection period for BNK Financial, which had originally been through last week, to this week. The FSS is inspecting whether BNK Financial provided preferential loans to Deutsch Motors and whether there were any problems in the process of selecting the next chair candidate. The FSS aims to complete the inspection by this week if possible.
In Oct. last year, National Assembly members from the Busan and South Gyeongsang region belonging to the Democratic Party of Korea raised the possibility that long-serving executives at BNK Financial improperly executed some loans. They also noted that the application period for the next chair candidate in the second half of last year overlapped with the Chuseok holiday and lasted only five business days, which was disadvantageous to other candidates, and that the start of the candidacy period was not properly announced, leading to criticism that the process lacked transparency.
The Financial Supervisory Service (FSS) is expected to release the results of its BNK Financial inspection before the shareholders meeting. In the financial sector, there is speculation that if a conclusion emerges that BNK Financial has problems with internal controls, it could disrupt Bin's extension. BNK Financial's largest shareholder is Lotte Shopping and related parties, but their equity is only 10.47%.
The National Pension Service (NPS) is the second-largest shareholder with 9.16%, and related parties, including Busan-based corporation Hyeopsung General Construction, hold 6.54%. The remainder is institutional investors and minority shareholders. Activist fund Life Asset Management, which holds 3% of BNK Financial's equity, opposes Bin's extension, citing procedural defects in the executive recommendation process.
BNK Financial has decided to hold a shareholder meeting on the 15th of this month for domestic and overseas institutional investors. If shareholders view the introduction of shareholder-recommended outside directors positively at the meeting, the board plans to review it. Outside directors are members of the Nominating Committee, which decides chair candidates.
In the financial sector, there are concerned views that the Financial Supervisory Service (FSS) is directly or indirectly intervening in BNK Financial's chair appointment process by using its inspection authority. A financial industry official said, "It is necessary to point out and correct flawed procedures, but it is not desirable for the government to intervene in the governance of a private financial holding company."
The Financial Supervisory Service (FSS) is reviewing whether to expand inspections to holding companies other than BNK Financial. An FSS official said, "We have received many tipoffs alleging problems in the process of appointing the BNK Financial chair, and we are checking whether anything was done contrary to procedure."