[1mm Financial Talk] Three Consecutive Dishonorable Resignations... BNK's New Chairman, Internal or External?

Internal Successors 1st and 2nd Presidents Resign Midterm, Followed by External Successor 3rd President

BNK Financial Group Headquarters

[Asia Economy Reporter Yu Je-hoon] Amid the resignation announcement of Kim Ji-wan, Chairman of BNK Financial Group, over allegations of preferential treatment for his children, the board of directors has revised the management succession regulations to allow external candidates to be recommended for the CEO position, drawing attention to the background of this move. During the recent National Assembly audit, concerns were raised mainly by the ruling party about Kim’s allegations and the ‘closed nature’ of the existing succession process focused on internal candidates, sparking worries that external pressures might be blowing again.

According to the financial sector on the 7th, BNK Financial Group held a board meeting in Seoul on the 4th and amended the CEO candidate recommendation and management succession procedures. The regulation stating, “If the chairman causes social controversy or worsens the group’s reputation risk, and the board recognizes the need for external recruitment, external personnel or retired executives may be added to the candidate pool in a limited manner,” was removed. Instead, a provision was added allowing “external candidates to be nominated as chairman candidates upon recommendation by an external professional institution.”

BNK Financial Group’s management succession regulations had a unique aspect. In 2018, the BNK Financial Group board established succession rules stipulating that the chairman position would be filled internally from among the group’s inside directors, executive officers (presidents or higher), and affiliate company representatives. Among South Korea’s top five financial holding companies (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) and other domestic financial holding companies, BNK Financial Group was the only one with such a rule mandating internal succession for the chairman position.

While this succession rule had the advantage of organizational stability, it also faced criticism as an attempt by certain factions to ‘entrench’ their power. Kim, a ‘securities man’ who served as president of Bukuk Securities, Hyundai Securities, and Hana Daetoo Securities (now Hana Securities), is an alumnus of Busan Commercial High School like the late former President Roh Moo-hyun and served as an economic advisor in former President Moon Jae-in’s presidential campaign. He left active duty after serving as vice chairman of Hana Financial Group in 2012 and returned as chairman of BNK Financial Group in 2017 after the 19th presidential election.

During the recent National Assembly audit, related criticisms poured in. Kang Min-guk, a member of the People Power Party, pointed out, “Chairman Kim himself was appointed as the group chairman through external recommendation in 2017, but the following year, internal regulations were restricted to prevent external candidate recommendations,” adding, “This effectively blocked anyone other than the affiliate presidents he appointed from becoming group chairman.” Financial Supervisory Service Governor Lee Bok-hyun also hinted at an investigation, saying, “There are indeed differences in the appointment procedures compared to other financial holding companies.”

Industry insiders believe that ongoing investigations and pressure over allegations of preferential treatment for Kim’s children led to his decision to resign. As a result, BNK Financial Group has now borne the stigma of three consecutive mid-term resignations following its first chairman Lee Jang-ho and second chairman Sung Se-hwan. Lee resigned amid regulatory pressure over close-knit management and long-term rule, while Sung stepped down during investigations into allegations of manipulating the company’s stock price. Although external candidates were appointed following the disgraceful resignations of internal figures, the group now faces the prospect of another dishonorable resignation.

With the regulations amended, the financial sector’s attention is now focused on the new chairman candidates. Among the nine internal candidates, including affiliate company presidents, An Gam-chan, president of BNK Busan Bank, is considered a strong contender. An insider familiar with the company’s internal affairs said, “There are other internal candidates close to Chairman Kim who could be considered strong, but since the affiliate company is currently under investigation by regulatory authorities over allegations of preferential treatment for children, the risk is high,” adding, “President An has shown good performance since his appointment and has often clashed with the existing top management, so there should be no major issues.”

Among external candidates, names such as Park Young-bin, chairman of the Construction Mutual Aid Association (former president of Gyeongnam Bank), Son Gyo-deok, former president of Gyeongnam Bank, Bin Dae-in, former president of Busan Bank, and Ahn Hyo-jun, former CEO of BNK Investment & Securities, are being discussed, along with former Woori Financial Group chairman Lee Pal-sung. The industry speculates that to stabilize the organization shaken by Kim’s resignation, a reputable figure from the financial sector might be added to the candidate pool.

However, skepticism remains regarding the appointment of external candidates. The BNK Busan Bank labor union and local civic groups have opposed ‘parachute’ appointments. A local financial sector official said, “The overall perception of government intervention in the financial sector has changed significantly compared to about ten years ago when the so-called ‘Four Heavenly Kings’ were placed in key positions. Also, public opinion polls show that the ruling party and president’s approval ratings are not high, so the momentum for external candidates may not be strong.”

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