COVID-19 and Sanctions Review... Weight on Kwon Kwang-seok's Reappointment as Bank President (Comprehensive)

Big Tech Expansion and COVID-19 Cause Banking Sector Crisis
On the 25th, Woori Bank Lime Scandal Sanctions Hearing
Jin Ok-dong, Shinhan Bank CEO Reappointment; Ji Seong-gyu, Hana Bank CEO and Yoon Seok-heon, Financial Supervisory Service Chief Also Likely to Be Reappointed

[Asia Economy Reporter Wondara] Woori Financial Group is expected to activate the Subsidiary CEO Candidate Recommendation Committee (Sub-CRC) as early as next week to discuss the reappointment of Kwon Kwang-seok, CEO of Woori Bank. Once the Sub-CRC recommends a candidate for the bank president, the final decision on Kwon's reappointment will be made through Woori Bank's Executive Candidate Recommendation Committee, the board of directors, and the shareholders' meeting.

Big Tech Expansion and COVID-19 Create Crisis in Banking Sector... Woori Bank Lime Incident Sanctions Review on the 25th

A Woori Financial Group official said on the 18th, "Kwon's term ends at the next shareholders' meeting," adding, "We plan to activate the Sub-CRC soon to recommend the next bank president candidate. Usually, the Sub-CRC convenes about a month before the shareholders' meeting." This year's Woori Bank shareholders' meeting is scheduled to be held between the 22nd and 26th of next month. Accordingly, the Sub-CRC should be fully operational by next week. However, Woori Bank stated, "Unlike the holding company, subsidiaries are not obligated to finalize decisions one month before the shareholders' meeting," and did not specify an exact timeline.

In the financial sector, the prevailing view is that CEO Kwon will be reappointed. This is because his leadership is considered essential amid crises such as COVID-19 and the entry of internet banks and big tech companies into the financial sector. The Financial Supervisory Service's Sanctions Review Committee, which will decide the disciplinary level regarding the Lime incident involving Woori Bank, will also convene on the 25th. Sohn Tae-seung, Chairman of Woori Financial Group, has already been preliminarily notified of a disciplinary action equivalent to suspension by the Financial Supervisory Service. Considering that the typical term for domestic bank CEOs is "a basic two years with a one-year extension based on performance," the extension of Kwon's term, who has not made any significant missteps, is seen as natural. Internally, Kwon is evaluated as having stabilized the organization shaken by the Derivative Linked Fund (DLF) incident and focused on strengthening consumer protection, thereby enhancing customer trust.

Jin Ok-dong Reappointed as Shinhan Bank CEO, Jisung-gyu of Hana Bank Also Expected to be Reappointed, Yoon Seok-heon’s Reappointment as FSC Chairman Suggested

From the financial authorities' perspective, it is important to maintain harmony with existing bank CEOs as the end of COVID-19 financial support approaches in the second half of the year, creating a 'COVID cliff.' Following the reappointment of Jin Ok-dong as Shinhan Bank CEO in December last year, there are also rumors of reappointment for Jisung-gyu, CEO of Hana Bank, whose term expires next month. Yoon Seok-heon, whose term as Financial Supervisory Service (FSS) Chairman expires in three months, is also being considered for the first-ever reappointment of an FSS Chairman. In its business plan announced on the 16th, the FSS noted, "Due to the prolonged COVID-19 pandemic, borrowers' debt repayment capacity is weakening, and there is concern that latent insolvencies may surface once financial support measures normalize," adding, "If interest rates rise during the economic recovery, defaults among marginal companies and households may increase."

Financial Services Commission Chairman Eun Sung-soo has also reiterated his stance not to intervene in the reappointment issues within the financial sector. During a parliamentary audit at the National Assembly's Political Affairs Committee, in response to Democratic Party lawmaker Kim Han-jung's question criticizing the reappointment of financial holding company chairpersons, Chairman Eun said, "In principle, it is a matter for financial companies to decide themselves," and added, "We are judging whether it contributes to the development of the financial industry." After a closed-door meeting on the 16th at the Bankers Association Hall in Jung-gu, Seoul, with the Bankers Association and the five major financial holding company chairpersons, Chairman Eun was asked about his stance on Kim Jung-tae's challenge for a fourth term as Hana Financial Group Chairman. He replied, "It is handled according to the board or the chairman recommendation committee procedures," and said, "I think it is right for financial authorities to respect each company's procedures."

Meanwhile, recently CEO Kwon proposed the 'Value Group (VG system)' as a solution to the risks posed by the accelerated financial entry of internet banks and big tech companies. The Value Group system is a collaborative framework that groups one key branch with approximately 4 to 8 nearby branches. The idea is to respond through joint sales activities, sharing of operational know-how, and joint customer management among branches. In his New Year's address this year, CEO Kwon mentioned the Value Group system, stating, "The emergence of internet-only banks, big tech, and platform companies demands fundamental innovation that requires redefining the definition of banking," and added, "In 2021, Woori Bank will set its direction as 'Digital First, Digital Initiative' and accelerate the digitalization of sales sites."

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