Banking Sector Personnel and Organizational Restructuring Begins... 'Change and Cut' Anticipated (Comprehensive)

NongHyup Bank Completes Last Week's Executive Appointments Including Vice Presidents, Headquarters Chiefs, and Department Heads
Shinhan Bank and Three Other Major Banks to Start Soon
Over 70% of Executives at Four Major Banks to End Terms This Month

[Asia Economy Reporter Park Sun-mi] Starting with NongHyup Bank, the banking sector has officially begun personnel appointments and organizational restructuring. A total of 64 executives from the four major commercial banks have terms expiring this year, and the scale of personnel changes is expected to vary depending on whether the focus is on stability or change. Additionally, due to the acceleration of non-face-to-face services amid the COVID-19 pandemic and competition with big tech companies, the importance of digital capabilities has increased, leading to expectations that organizational restructuring will focus on this area.

According to the banking sector on the 15th, after NongHyup Bank conducted personnel appointments up to the level of vice presidents, headquarters chiefs, and department heads last week, the four major commercial banks will enter the personnel and organizational restructuring season by the end of the year. Shinhan Bank will hold a Subsidiary Management Committee (SMC) meeting of Shinhan Financial Group on the 17th to decide the future of Shinhan Bank President Jin Ok-dong, whose term expires at the end of this month, and then sequentially conduct personnel appointments for vice presidents and headquarters chiefs by the 30th.

At Shinhan Bank, among the 20 vice presidents, 14 will have their terms expire at the end of this month, along with one standing auditor and two managing directors. Personnel appointments for general employees below department heads are also expected to be completed by January next year.

Woori Bank will begin personnel appointments and organizational restructuring as early as this weekend or by early next week at the latest.

Among Woori Bank’s 23 executives, the terms of three vice presidents, ten assistant vice presidents, and one managing director, totaling 14 executives, will expire at the end of this month. Organizational restructuring will accompany personnel changes with a focus on strengthening digital capabilities. Hana Bank, which traditionally conducts personnel appointments around the Christmas holidays, will start personnel appointments around the 24th of this month. Sixteen executives, including five vice presidents and eleven executive directors, face term expirations at the end of this month. KB Kookmin Bank, which has conducted year-end personnel appointments, will begin personnel appointments and organizational restructuring around the 27th of this month. Under KB Kookmin Bank President Hur In, all six vice presidents will have their terms expire at the end of this month.

Over 70% of Executives at the Four Major Banks Have Terms Expiring This Month
Where Will the Balance Lie Between Stability and Change?
Growing Need for Organizational Restructuring Aligned with the Digital Environment

With over 70% of executives at the four major banks having terms expiring this month, the banking sector’s management faces a complex calculation between organizational stability through reappointment and new initiatives involving personnel changes. Even amid the spread of COVID-19, NongHyup Bank boldly replaced six of its twelve internally promoted vice presidents in this personnel round and carried out organizational restructuring emphasizing the digital sector, opening the possibility that other banks will also proceed with generational changes aligned with the evolving digital environment.

A banking sector official preparing for personnel appointments said, "If there is a large-scale executive personnel change this time, the degree of organizational restructuring will also be significant, so major changes could occur. The environment banks face next year, including big tech offensives, is challenging, making executive personnel appointments and organizational restructuring crucial."

The banking sector is also conducting large-scale voluntary retirements in line with the year-end personnel and organizational season. NongHyup Bank, offering up to 39 months’ salary as severance pay, received 503 voluntary retirement applications, a 41% increase from last year. The other four major commercial banks are in the final stages of labor-management negotiations for voluntary retirement, and it is expected that agreements will be reached by next week at the latest.

Voluntary Retirement Scale Expected to Increase in the Banking Sector
Other Banks Following NongHyup Bank in Finalizing Labor-Management Negotiations for Voluntary Retirement

Warnings have been issued that the asset soundness of banks will deteriorate next year and credit ratings will be negative. Branches where machines have replaced simple tasks and eliminated staff are being newly established, while existing branches are being consolidated or closed. Consequently, the number of bank branches where employees can be assigned continues to decline. Financial conditions for funds to be given to retiring employees are relatively generous, leading to expectations of a sharp increase in voluntary retirements in the banking sector.

Meanwhile, coinciding with the banking sector’s personnel season, Kim Woo-jin, Senior Researcher at the Korea Institute of Finance, released a report titled "Improvement Measures for Human Resource Management Systems in Domestic Banks," pointing out that "banks’ core competencies lie in intangible assets such as human capabilities rather than hardware aspects like capital and asset size. However, domestic banks show a bottleneck-shaped workforce structure with a low ratio of clerks compared to managers and suffer from a shortage of specialists."

He advised, "A bottleneck-shaped workforce structure with many managers leads to decreased vitality and increased costs for banks. It is necessary to continuously pursue reforms of related systems that can support performance management-oriented business activities."

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