New Savior for the Banking Sector? Growing Attention on the Next Bank Federation Chairman

Chairman Kim Taeyoung's Term Expires Next Month

[Asia Economy Reporter Park Sun-mi] Amid fierce competition with big tech companies and enduring political pressure, the banking industry is focusing on the election of the next chairman of the Korea Federation of Banks. In 2017, a private-sector figure was appointed as chairman amid a sentiment to exclude 'Gwanpia' (a portmanteau of bureaucrat and mafia), but this time the balance seems to be tipping back toward a former government official. The prevailing view is that selecting a person who can exert influence in the political arena will help properly represent the banking sector's position and aid in overcoming the current crisis.

According to the financial sector on the 5th, the Korea Federation of Banks will begin the process of selecting a new chairman at the board meeting scheduled for the end of this month, as Chairman Kim Tae-young's term expires on the 30th of next month.

The election of the chairman is conducted confidentially based on candidate recommendations from member banks and is decided through a vote in November. According to the bylaws, the chairman's term is three years with the possibility of one reappointment. Therefore, Chairman Kim, who took office in November 2017, could potentially be reappointed once after his term expires next month. However, since Chairman Jeong Chun-taek's successful reappointment from 1989 to 1993, there have been no cases of reappointment.

Current candidates from former government officials include former Financial Services Commission Chairmen Choi Jong-gu and Lim Jong-ryong, former Democratic Party lawmaker Min Byung-doo, Yoon Dae-hee, Chairman of the Korea Credit Guarantee Fund, and Kim Yong-hwan, former Chairman of NH Nonghyup Financial Group.

Former Government Officials Listed as Leading Candidates

The most prominent candidate, former Chairman Choi, is a 25th pass of the Administrative Examination and a representative former government official who spent a long time at the Ministry of Strategy and Finance.

Having served as President of the Export-Import Bank in 2017, he is well acquainted with the banking environment and also served as Financial Services Commission Chairman, which highlights his ability to voice opinions in the political arena. Former lawmaker Min, having chaired the National Assembly's Political Affairs Committee, is well aware of banking issues and is considered a strong candidate due to his potential role as a shield against political attacks on the banking sector.

However, Min is also mentioned as a potential successor to Jung Ji-won, Chairman of the Korea Exchange, whose term expires on the 1st of next month, due to his expertise from eight years on the Political Affairs Committee overseeing securities and financial institutions, which adds an element of uncertainty. Former Chairmen Lim and Kim are financial experts but their ties to economic bureaucrats and the Nonghyup presidency during the Park Geun-hye administration could be seen as weaknesses.

There are also rumors that Lee Jung-hwan, President of the Korea Housing Finance Corporation, who took office in January 2018 and whose term expires early next year, is eyeing the Korea Federation of Banks chairman position as a former economic bureaucrat. However, Lee has been labeled a 'pro-government parachute' figure aligned with the pro-Moon Jae-in faction, which could cause controversy if he is elected chairman.

Currently, banks are struggling to secure profitability amid a low-interest-rate trend and shrinking market share due to big tech companies entering the financial sector. Additionally, following a series of private equity fund accidents, the political sphere is attempting to tighten regulations on banks. A banking industry official explained, "Even if the chairman of the Korea Federation of Banks changes, political pressure on the banking sector will not decrease, but there is hope that if a powerful former government official takes the position, the banking sector's voice will be better reflected," adding, "This is why the banking sector is paying close attention to the election of the next chairman."

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