Union and External Pressure... Bank Heads on a 'Bed of Nails'

Opposition to Jeju Bank President's 4th Term Reappointment
Calls for DGB Financial Chairman's Resignation
Concerns Over External Pressure Amid New Administration Launch

[Asia Economy Reporter Seong Gi-ho] Financial companies are experiencing turmoil ahead of the timing of CEO leadership changes. Criticism is growing that not only internal labor unions but also civic groups are intervening in personnel matters, shaking the governance of private financial companies. In particular, concerns are rising that political pressure may increase using this turmoil as a pretext ahead of the 20th presidential election.

According to the financial sector on the 15th, the National Financial Industry Labor Union, together with the Jeju Bank union, is actively opposing the 4th term reappointment of Seo Hyun-joo, CEO of Jeju Bank, whose term expires in March next year. Since the 9th, the financial union and Jeju Bank union have been holding two daily solo protests in the lobby on the first floor of Shinhan Bank headquarters, a subsidiary of the parent company Shinhan Financial Group. The union maintained a tough stance, stating, "If the reappointment is forced, we will launch a strong struggle, including reporting to financial authorities and judicial institutions."

The Daegu Bank union and local civic groups have also recently demanded the resignation of Kim Tae-oh, chairman of DGB Financial Group. They are calling for his resignation using the prosecution's indictment related to Cambodia business as a pretext. He succeeded in his reappointment in March this year and has about 2 years and 4 months left until March 2024. With the prosecution indicting Chairman Kim, DGB Financial, which had been sailing smoothly, is now forced to focus on managing judicial risks for the time being.

In the financial sector, there is widespread concern that turmoil over leadership appointments could bring external pressure coinciding with the start of a new administration. Especially for policy banks, there is anxiety that private financial companies could also be affected, as there have been precedents where heads were replaced before completing their terms after presidential elections.

Currently, the terms of Lee Dong-geol, chairman of KDB Industrial Bank, Yoon Jong-won, president of IBK Industrial Bank, and Bang Moon-kyu, president of Korea Eximbank, have about a year left. A bank official said, "It is common for new personnel to come when a new administration is established for policy banks," adding, "It can vary depending on whether there is a regime change or not, but it is true that it becomes a significant variable in the term."

The situation of private financial companies is equally sensitive. Recently, the ruling party has even pushed for legislation limiting CEOs of financial companies to three consecutive terms, sparking controversy over excessive regulation.

In March next year, the terms of the chairmen of Hana Financial Group and JB Financial Group will expire. The term of Cho Yong-byeong, chairman of Shinhan Financial Group, expires in March 2023. Depending on whether the related bill promoted by the ruling party passes, the situation could change rapidly. In the case of DGB Financial, since Chairman Kim was recruited from outside, specifically from Hana Financial, there is an interpretation that local civic groups are also stepping in to demand his resignation. Coincidentally, the 7th nationwide local elections are scheduled for June next year.

In the financial sector, there are many voices of concern that internal and external turmoil over leadership appointments could cause significant confusion. A financial sector official pointed out, "The time when a new administration comes in is the most unstable period for the governance of private financial companies," adding, "The very fact that there are worries that the CEO positions of financial companies become targets of the political sphere coinciding with the presidential and local elections is itself a problem."

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