The announcement of a plan to improve the governance of financial holding companies, which the financial authorities have been preparing since the end of last year, keeps being delayed. Financial Supervisory Service Governor Lee Chan-jin said at a recent press briefing that it was expected in early this month, but the Financial Services Commission has not set the timing of the announcement. In the industry, there is an expectation that it will come before the presidential policy briefing scheduled for mid-month.
According to the financial authorities on the 1st, the Financial Services Commission (FSC) is coordinating sensitive issues to be included in the governance reform plan until the last minute. A senior FSC official said, "There are some sensitive matters, so given the current situation, it seems unlikely we can announce even by next week."
Earlier, Financial Supervisory Service (FSS) Governor Lee Chan-jin said at last week's monthly press briefing, "I understand KB Financial is set to release its shortlist of candidates for the next chair on July 3, and before that, the Financial Services Commission will announce the governance reform plan."
The plan is expected to include the selection process for financial holding company chairs, board independence, and ways to improve performance-based pay systems. In particular, the key question is whether to limit a chair's third consecutive term through a legal amendment, or to set it in the form of best-practice guidelines.
Lee has strongly criticized consecutive terms for financial holding company chairs. At a recent workshop with internal control officers from the eight major banking groups and 20 banks, the same problem was noted.
The FSS's core tasks for the second half are also expected to involve legal amendments. The goal is to focus on institutionalizing through legislation the matters examined and organized by the FSS in the first half, including governance reform. It is said that the legislative process will proceed immediately starting this month, when National Assembly standing committees are formed.
The Financial Services Commission (FSC) also finds it hard to delay the holding-company reform plan much longer. President Lee Jae-myung said at the end of last year regarding the governance of financial institutions, "When left alone, a corrupt inner circle forms, and a small group keeps rotating to exercise control as they please." For this reason, there is a view that the plan could come before the presidential policy briefing scheduled for mid-month.
An FSS official said, "The comments at the (Lee Chan-jin's) press briefing seem to have stemmed from the expectation that an announcement would come soon," adding, "The ball on the timing of the announcement has moved to the Financial Services Commission (FSC)."