Yoon Jong-kyu, KB Financial Group Chairman, Aiming for a Third Term? (Comprehensive)

Leading KB Financial Group avoids private equity fund scandal
Chairman Yoon's term ends November 20... Possibility of third term raised
Many important tasks remain, including completing Prudential acquisition

[Asia Economy Reporter Park Sun-mi] As KB Financial Group enters the process of selecting a successor to 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’s solidification of its leading position in the financial holding sector this year, along with avoiding the private equity fund scandal, has highlighted Chairman Yoon’s management achievements.

According to KB Financial on the 13th, the Chairman Candidate Recommendation Committee (hereinafter referred to as the Committee), composed of seven outside directors, approved the “Detailed Rules for Chairman Candidate Recommendation Procedures” at a meeting held the previous day. This document outlines the schedule for recommending chairman candidates and the methods for evaluating and selecting candidates. The Committee will hold another meeting on the 28th to finalize a shortlist of four chairman candidates through voting from a long list of 10 internal and external candidates confirmed in April.

On the 16th of next month, an in-depth evaluation through interviews will be conducted for the final candidates. Subsequently, one final chairman candidate will be selected by obtaining votes from at least two-thirds of the Committee members (five out of seven). After the recommendation procedures by the Committee and the Board of Directors on the 25th, the chairman will be appointed at an extraordinary shareholders’ meeting scheduled for November.

Inside and outside KB Financial, there is speculation about Chairman Yoon’s possibility of a third term, as he is included among the five internal candidates. If Yoon succeeds in securing a third term, he will become the first chairman in KB Financial’s history to do so. Within the financial holding sector, 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.

Possibility of Chairman Yoon’s Third Term 'Rises'

KB Financial’s solidification of its leading position in the financial holding industry under Chairman Yoon’s management is highly regarded. 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 reached 981.8 billion KRW, a 35% increase compared to the same period last year. This significantly exceeded market experts’ expectations of around 880 billion KRW. Surpassing the previous leader, Shinhan Financial Group (873.1 billion KRW), KB Financial secured the top spot in the financial holding sector. Moreover, KB Financial avoided the private equity fund scandals, such as the Derivative Linked Fund (DLF) and Lime Fund incidents, which caused significant losses in the financial industry. If this momentum continues into the second half of the year, KB Financial is expected to maintain its lead over Shinhan in the full-year performance.

KB Financial’s upcoming completion of major mergers and acquisitions (M&A) and the need for smooth integration with new organizations also bolster Chairman Yoon’s chances of reappointment. KB Financial has formed an integration task force one month ahead of the formal incorporation of Prudential Life Insurance. Given the ongoing low-interest-rate environment and the increased dependence on non-bank affiliates within the holding company, strengthening competitiveness in the insurance sector?previously considered a weak point?is a critical task for KB Financial through the Prudential Life acquisition. Since his inauguration in 2014, Chairman Yoon has successfully expanded KB Financial’s scale through significant M&As such as Hyundai Securities (now KB Securities) and LIG Insurance (now KB Insurance). There is great expectation that he will complete the groundwork to generate synergy from the Prudential Life acquisition as well.

As KB Financial identifies global business as a key strategy for expanding its business areas this year, the imminent completion of KB Kookmin Bank’s acquisition of Indonesia’s Bank Bukopin also enhances Chairman Yoon’s prospects for reappointment. The acquisition of Bank Bukopin, expected to be finalized by the end of this month, along with the acquisition of Cambodia’s leading microfinance institution Prasac Microfinance in April, is anticipated to serve as a turning point for KB Kookmin Bank’s global business expansion.

▲The addition of new qualification criteria for the chairman position?such as responding to the global crisis caused by COVID-19, leadership in digital transformation, and commitment to Environmental, Social, and Governance (ESG) practices?reflects measures likely taken with Chairman Yoon’s reappointment in mind. In particular, Chairman Yoon is recognized in the industry as a leader in ESG management. Under his 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 initiatives for 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.

KB Financial Union Conducts Survey on Chairman Yoon’s Reappointment

As the possibility of Chairman Yoon’s reappointment grows, the KB Financial 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 regarding 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,” attributing this to KB Financial’s growth and visible management achievements since Yoon’s inauguration. Meanwhile, the decision on Yoon’s third term is likely to influence the tenure of KB Kookmin Bank President Heo In, who is regarded as having a good working relationship with Chairman Yoon. President Heo, who took office in 2017 and secured a one-year extension last year, also has a term ending this November, coinciding with Yoon’s.

The KB Financial Chairman Candidate Recommendation Committee stated that the chairman candidate recommendation process is systematically structured and stably operated, ensuring “the representativeness and independence of the Committee,” “fairness and openness in the composition of the candidate pool,” and “nurturing and continuous evaluation of internal candidates.” To secure fairness and transparency in the recommendation process, the Committee conducted consultations via email, conference calls, and interviews over about a month starting late May with major institutional shareholders, employee representatives, and labor union representatives. These discussions gathered opinions on KB’s strategic challenges and tasks in this era of crisis and the capabilities required of the chairman to address them.

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