Mandatory from next year... Financial holding companies struggle to find female outside directors (Comprehensive)

Woori Financial Group and 3 Major Regional Financial Holdings Have No Candidates
"Limited Talent Pool Makes It Difficult to Find Candidates"

[Asia Economy Reporter Sung Ki-ho] Along with the shareholder meeting season and ahead of the amendment to the Act on Capital Market and Financial Investment Business (Capital Market Act) to be implemented next year, financial holding companies are becoming increasingly active. 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. Because of this, there is only time during this year's and next year's shareholder meetings to comply with the amendment. However, unlike private companies where a large number of female outside directors are entering, no significant changes are being observed in financial holding companies. It is pointed out that the difficulty in recruiting female talent amid a labor shortage and the conservative management mindset of financial holding companies are the problems.

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

The fact that only one out of six newly appointed outside directors is female shows a significant difference compared to private companies. According to 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 males (68%) and 31 females (32%). One out of every three newly appointed outside directors is female, which is about twice the proportion of female outside directors appointed by financial holding companies (16.6%).

Currently, including Woori Financial Group and Woori Bank, the three major regional financial holding companies (BNK, DGB, JB Financial Group) and regional banks have no female outside directors. The appointment of female outside directors has recently become a hot topic at shareholder meetings. This is because the amendment to the Act on Capital Market and Financial Investment Business (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 be enforced from August next year. However, there is criticism about the effectiveness of the law since there are no specific penalties even if the provision is ignored and the board is composed entirely of men.

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 Sook-kyo, 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 Eun-young, 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 Yoo-sun, 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 enforcement of the law," but added, "Since the pool of female talent is limited and the law is mandatory, cases where experienced personnel in the same industry just move positions will increase."

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