[1mm Finance Talk] "To Avoid Favoring a Particular Individual"... Why Shinhan Financial Group Is Focusing on 'Fairness' in the Next Chairman Selection

Chairman Refrains from Public Activities: “Ensuring a Level Playing Field”
Committee Extends Timeline to Consider External Candidates
Final Shortlist Expected as Early as Next Week

Shinhan Financial Group, which is in the process of selecting its next chairman ahead of the current term's expiration in March next year, is expected to finalize its shortlist of candidates as early as next week. This means that, about two months after the Chairman Candidate Recommendation Committee (the Committee) was launched at the end of September, the list of candidates has been narrowed down to about three or four individuals and will be released.

Shinhan Financial Group Headquarters Exterior View.

For the past 40 days or so, Jin Okdong, Chairman of Shinhan Financial Group, has refrained from public appearances and has virtually kept out of the public eye. He quietly went on scheduled overseas business trips without making them known, and there were no public remarks recorded in official materials. Even when Shinhan Financial Group recently announced a large-scale, productive financial investment plan worth 110 trillion won over five years, Chairman Jin's name was not mentioned at all. This is a departure from the usual practice where the Chief Executive Officer (CEO) would outline the direction and future plans during major announcements. This also stands in contrast to other financial holding group chairmen, who have taken a more visible role in similar situations.

The fact that Chairman Jin has been deliberately avoiding public activities during the Committee's deliberation period is interpreted as reflecting an internal determination to prevent the selection process for the next chairman from appearing as a "tilted playing field." A source in the financial sector said, "He is not only the incumbent chairman but also one of the candidates for the next chairman," adding, "It seems he is consciously avoiding the appearance of using his current position for self-promotion." An insider within the group also commented, "The internal consensus is to avoid any bias toward a particular individual," and added, "This awareness has been learned and internalized through previous chairman selection processes, but it feels particularly pronounced this time around."

The fact that the Committee was convened about a month earlier than during the 2022 selection process is also related to this effort. Traditionally, the process of selecting the next chairman would begin with the Committee being launched around November of the year before the term ends, followed by about a month of vetting, and the final shortlist would be selected in early December. There had been criticism that this tight schedule disadvantaged external candidates who had less time to prepare, resulting in many declining the offer to be included in the final shortlist even when approached.

This year, Shinhan Financial Group's decision to move up the Committee's schedule is seen as an effort to minimize the practice of filling the final shortlist exclusively with internal candidates. This approach aligns with the best practice guidelines for corporate governance issued by the Financial Supervisory Service in December 2023, which emphasized this point.

Once the final shortlist is determined, Shinhan Financial Group will conduct interviews and, no later than early next month, hold an expanded Committee meeting and a board meeting to select the final candidate. Within the financial sector, the main focus is whether Chairman Jin will be reappointed. Given his management performance since taking office, most expect his reappointment to proceed smoothly. There has never been a case in the past where a chairman served only a single three-year term. Being the only financial holding group chairman invited to major new government events, such as the August 15 Presidential National Appointment Ceremony and the National Growth Fund Briefing, is also seen as a favorable factor for Chairman Jin.

However, there are still variables, as three years ago, contrary to market expectations, Chairman Cho Yongbyung's bid for a third term was unsuccessful, and this is effectively the first major financial holding group appointment since the change in administration.