KB Financial Secures Lead... Will Chairman Yoon Jong-kyu Serve a Third Term?

November 20 Term Expiration
Avoiding Private Equity Fund Scandal, 2nd Quarter Earnings Rank 1st Among Financial Holdings
Pending M&A Tasks Including Prudential Life and Indonesia's Bukopin Bank Acquisition

[Asia Economy Reporter Park Sun-mi] As KB Financial Group enters the process of selecting a successor for Chairman Yoon Jong-kyu, whose term expires on November 20, the possibility of Yoon’s third term is emerging. This is because there have already been cases of three-term chairmen among financial holding companies, and KB Financial has solidified its position as the leading financial holding company this year while avoiding the private equity fund scandal, highlighting Yoon’s management achievements.

On the 13th, insiders both inside and outside KB Financial predicted the possibility of Yoon’s third term, as he is included among the five internal candidates. If Yoon succeeds in his third term, he will become the first chairman in KB Financial’s history to serve three consecutive terms. Within the financial holding industry, former Shinhan Financial Group Chairman Ra Eung-chan, former Hana Financial Group Chairman Kim Seung-yu, and current Hana Financial Group Chairman Kim Jung-tae have all served three terms.

One of the most highly evaluated aspects is KB Financial’s solidification of its leading position in the industry under Yoon’s management. Despite the ultra-low interest rate environment caused by the spread of COVID-19, KB Financial’s net profit for the second quarter of this year was 981.8 billion KRW, a 35% increase compared to the same period last year. This significantly exceeded market experts’ estimates of around 880 billion KRW. KB Financial surpassed the previous leader, Shinhan Financial Group (873.1 billion KRW), establishing itself as the number one financial holding company. Having also avoided the private equity fund scandals such as the Derivative Linked Fund (DLF) and Lime Fund, which caused significant losses in the financial industry, there is optimism that if the current momentum continues into the second half of the year, KB Financial could maintain its top position over Shinhan in the full-year results.

KB Financial’s upcoming completion of major mergers and acquisitions (M&A) and the need for smooth integration with the new organization also support the possibility of Yoon’s reappointment. KB Financial has formed an integration task force one month ahead of the formal incorporation of Prudential Life Insurance. As the holding company’s dependence on non-bank affiliates has increased due to the ongoing low interest rates, it is an important task for KB Financial to strengthen the competitiveness of its insurance sector, which has been pointed out as a weakness, using the Prudential Life acquisition as a turning point. Accordingly, there is great expectation that Yoon, who has successfully expanded KB Financial’s scale through major M&As such as Hyundai Securities (now KB Securities) and LIG Insurance (now KB Insurance) since his appointment in 2014, will complete the groundwork to generate synergy through the Prudential Life acquisition.

As KB Financial identifies global business as one of its strategies for business expansion this year, the acquisition of Indonesia’s Bukopin Bank by KB Kookmin Bank, which is nearing completion, also increases the likelihood of Yoon’s reappointment. Bukopin Bank, whose acquisition is expected to be finalized by the end of this month, is anticipated to serve as a turning point for KB Kookmin Bank’s global business alongside the acquisition of Cambodia’s top microfinance institution, Prasac Microfinance, in April.

▲The addition of new qualifications for the chairman position, such as responding to the global crisis caused by COVID-19, leadership in digitalization, and commitment to Environmental, Social, and Governance (ESG) practices, is also interpreted as a measure considering Yoon’s reappointment. In particular, Yoon is recognized in the industry as a leader in ESG management. Under Yoon’s leadership, KB Financial established the first ESG committee within the board of directors in the financial sector this year and is fostering ESG-related businesses as core strategic projects of the group.

Recently, KB Financial announced an ESG management strategy to expand 'ESG products, investments, and loans' from the current 20 trillion KRW to 50 trillion KRW by 2030. As the possibility of Yoon’s reappointment grows, KB Financial’s labor union has begun preparations. The union, which opposed Yoon’s second term in 2017, conducted a survey among union members across all affiliates yesterday to gauge support or opposition to Yoon’s reappointment. However, among approximately 25,000 union members, the card and insurance unions, excluding those from banking and securities, refused to participate, leading to criticism that the survey lacks representativeness. The union plans to decide around the 20th whether to announce the 'partial' survey results.

Inside KB Financial, it is explained that "the number of union members opposing Yoon’s reappointment has decreased significantly compared to the second term," and "this is largely due to KB Financial’s growth and visible management achievements since Yoon took office." Meanwhile, Yoon’s third term decision is likely to influence the tenure of Heo In, President of KB Kookmin Bank, who is regarded as having good compatibility with Yoon. Heo, who took office in 2017 and succeeded in a one-year extension last year, also has a term ending this November, the same as Yoon’s.

This content was produced with the assistance of AI translation services.