Is the Next Bank Federation Chairman a Former Bureaucrat?... Can They Be the Savior for Banks on the Brink (Comprehensive)

Chairman Kim Taeyoung's Term Ends Next Month
Bankers Association to Begin New Chairman Election Process at Board Meeting Later This Month

Kim Tae-young, Chairman of the Korea Federation of Banks

[Asia Economy Reporter Park Sun-mi] Amid fierce competition with big tech (large information and communication companies) and enduring political pressure, the banking industry is focusing on the election of the next chairman of the Korea Federation of Banks.

In the 2017 election for the chairman of the Federation of Banks, a private-sector candidate was appointed 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 figure who can exert influence in the political arena would properly represent the banking sector’s position and help overcome 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. Accordingly, 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.

Former Financial Services Commission Chairman Choi Jong-gu [Image source=Yonhap News]

Current candidates for the next chairman 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 Named as Leading Candidates

Former Min Byung-doo, Democratic Party of Korea lawmaker Photo by Yonhap News

The most prominent candidate, former Chairman Choi, is a 25th-grade administrative examination pass 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 having also served as Financial Services Commission Chairman, his ability to voice opinions in the political arena is seen as an advantage. 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 banks.

However, Min’s expertise from eight years of activity in the Political Affairs Committee, which oversees securities and financial institutions, makes him a candidate for the successor to Jung Ji-won, Chairman of the Korea Exchange, whose term expires on the 1st of next month, which is a variable factor. Former Chairmen Lim and Kim are financial experts, but their tenure as economic bureaucrats and Nonghyup chairmen during the Park Geun-hye administration could be seen as a weakness(?).

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 chairman position of the Federation of Banks as an economic bureaucrat. However, Lee has been labeled a 'pro-government parachute' as a pro-Moon Jae-in figure, so if elected chairman, he could face controversy.

Currently, banks are struggling to secure profitability amid a low-interest-rate trend, and their position has been narrowed by big tech’s entry into the financial industry. Additionally, following a series of private equity fund accidents, the political sector is attempting to strengthen regulations on banks.

A bank official said, "Even if the chairman of the 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," explaining, "This is why the banking sector is paying attention to the election of the next chairman."

Another official said, "Whether a former bureaucrat or head of a financial public institution, qualified individuals are likely aiming for the next chairman position," adding, "Although there is no regulation in the bylaws, there is an unwritten rule that the candidate should have experience as a financial holding company chairman or bank president."

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