'Picking Stars from the Sky' Financial Holding Companies Struggle to Find Female Outside Directors

Woori Financial Group and 3 Major Regional Financial Holdings Have No Representatives
Mandatory from Next Year... "Finding Candidates Is Not Easy"

[Asia Economy Reporter Kiho Sung] Financial holding companies are stepping up their efforts ahead of the amendment to the Act on Capital Market and Financial Investment Business (Capital Market Act) to be implemented next year. From next year, listed companies with total assets of 2 trillion won or more will be required to appoint at least one female executive director. However, unlike private companies where female outside directors are entering in large numbers, no significant changes are being observed among financial holding companies. It is pointed out that the difficulty in recruiting female talent and the conservative management mindset of financial holding companies are the main issues.

According to the financial sector on the 23rd, following Shinhan Financial Group’s shareholders’ meeting on the 25th, KB, Hana, and Woori Financial Groups will simultaneously hold their shareholders’ meetings on the 26th. Among the six newly appointed outside directors at these holding companies, only one is female. NongHyup Financial Group’s shareholders’ meeting is scheduled for the 31st of this month, but the list of new outside directors has not yet been announced.

According to the Korea CXO Research Institute, a corporate analysis specialist, among the top 100 listed companies in Korea by sales, 97 outside directors are newly appointed this year, with 66 men (68%) and 31 women (32%). One out of every three newly appointed outside directors is female, which is about twice the rate of female outside director appointments at financial holding companies (16.6%).

The appointment of female outside directors has become a hot topic at recent shareholders’ meetings. This is because the amendment to the Capital Market Act, which prohibits the board of directors of listed companies with assets of 2 trillion won or more from being composed of only one gender, will take effect from August next year. However, there is criticism about the effectiveness of the law since there are no specific penalties even if the board is composed entirely of men in violation of the law.

Currently, Woori Financial Group and Woori Bank, along with the three major regional financial holding companies (BNK, DGB, JB Financial) and regional banks, have no female outside directors. These companies must complete the necessary measures by July next year at the latest, but since appointments must be made through shareholders’ meetings, they only have two opportunities: this year’s and next year’s shareholders’ meetings. At least one female outside director must be appointed next year.

Concerns Deepen Over Mandatory Female Executive Directors Starting Next Year

Industry insiders complain that it is not easy to find female outside director candidates. In fact, Kwon Sookkyo, who was newly appointed as an outside director at Hana Financial Group this time, currently serves as an outside director at KB Kookmin Bank. Also, Cha Eunyoung, whose term expires this year as an outside director at Hana Financial Group, previously served as an outside director at Hana Bank for five years starting in 2005 before moving to her current position. Nam Yooseon, an outside director at NongHyup Financial Group, served as an outside director at NongHyup Bank for three years starting in 2016 before being appointed as an outside director at the holding company after her term expired.

While these outside directors are praised for their expertise spanning both banks and holding companies, there is also criticism that this is a form of “musical chairs.” The conservative mindset of financial company management is also pointed out as a problem.

A financial sector official said, "Financial companies are focusing on recruiting female outside directors ahead of the changing times and the law’s enforcement," but added, "Since the pool of female talent is limited and the law mandates it, cases where experienced personnel in the same industry simply move positions are likely to increase."

Meanwhile, most outside directors of the four major financial holding companies are being recommended for reappointment at this shareholders’ meeting. Only Shinhan Financial Group and Hana Financial Group have recommended four and two new outside director candidates, respectively.

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