Cho Yong-byeong's Sudden Resignation... What Happened at Shinhan Financial Group Chairman Interview?

Clear Intent for Reappointment... Sudden Resignation Overnight 'Twist'
Rumors of External Pressure and Veto Spread

[Asia Economy Reporter Yu Je-hoon] Around 8:30 a.m. on December 8, the "day of decision," on the first floor of Shinhan Financial Group headquarters in Jung-gu, Seoul, the final candidates for the next CEO and chairman appeared one after another ahead of the final interview by the Shinhan Financial Group Chairman Candidate Recommendation Committee. The candidates were Lim Young-jin, President of Shinhan Card; Jin Ok-dong, President of Shinhan Bank; and Cho Yong-byeong, Chairman of Shinhan Financial Group. The candidates met with the press and presented the "vision" they would emphasize in the final interview. President Lim mentioned "change and innovation," President Jin spoke of "sustainable management for 100 years of Shinhan," and Chairman Cho, when asked about organizational restructuring, said, "As the organization has grown, change is necessary."

The interview began after the opening remarks by Committee Chairman Seong Jae-ho (outside director) in the 16th-floor conference room of Shinhan Financial Group headquarters, where the recommendation committee was held. The original interview order was alphabetical: President Lim, Chairman Cho, and President Jin. However, the order was changed to President Lim, President Jin, and Chairman Cho. When it was Chairman Cho's turn, he said, "I will go last," so President Jin gave his presentation first. After President Jin's presentation ended, Chairman Cho suddenly announced his intention to resign.

This was the biggest "surprise" that heated up the financial sector at the end of this year. Despite expectations inside and outside the company that Chairman Cho would likely secure a third term, having overcome various legal risks and achieved the status of "leading bank," he unexpectedly declared his resignation on the day of the final interview.

Chairman Cho explained his resignation as a personal decision, saying, "There is a difference between leaving when you can and leaving because you have no choice." However, in the financial sector, theories about external pressure from the government and vetoes by major shareholders are gaining traction regarding this questionable leadership change. Starting with Chairman Cho, financial companies facing leadership changes, such as BNK Financial Group, NH Nonghyup Financial Group, and Woori Financial Group, are showing clear signs of tension.

According to the financial sector on the 23rd, until just before the Shinhan Financial Group Chairman Candidate Recommendation Committee and board meeting held on the 8th, the company and outside observers strongly anticipated Chairman Cho's third term. This was due to achieving a cumulative net profit of 4.3 trillion won in the third quarter, surpassing rival KB Financial Group to become the "leading bank," as well as successfully building a comprehensive financial portfolio through the acquisition of Shinhan Life and Shinhan EZ Insurance.

The legal risks that had been tightening around Chairman Cho like a hidden adversary were gradually resolved one by one. Regarding the Lime Asset Management fund redemption crisis, he received a final "caution" from the Financial Supervisory Service last year, avoiding severe disciplinary action, and in June, the Supreme Court acquitted him of allegations related to hiring irregularities, clearing his legal risks. Since the major shareholders, who are Korean-Japanese, hold significant shares, Chairman Cho was relatively free from external pressures in terms of governance, which also increased the likelihood of his third term.

It is reported that Chairman Cho was clearly willing to serve another term. Until a few days before the recommendation committee meeting, he was reportedly focused on preparing his final interview presentation. However, whether he received a message directly from somewhere or heard it through acquaintances is unknown, but it seems he clearly understood the authorities' intentions. Just before the committee on the 8th, Chairman Cho reportedly conveyed his intention to resign to President Jin and told him to prepare well for the interview.

The financial sector expressed bewilderment. This was because until just before the recommendation committee, Chairman Cho was considering organizational restructuring plans, including the establishment of a vice-chairman-level general manager position within Shinhan Financial Group. On the morning of the day, when meeting the press, Chairman Cho also expressed his opinion, saying, "As the organization has grown, change is necessary," and "We need to make the organization more sophisticated and create a system that can make decisions quickly." The vice-chairman position he had prepared was not realized in the recent Shinhan Financial Group personnel reshuffle.

Because of this, theories about external pressure are circulating in the financial sector. Amid ongoing criticism of long-term rule by financial company CEOs, mainly from the ruling party, it is speculated that there was intervention from higher-ups aware of this. A financial sector official said, "It is rumored that the so-called 'higher-ups' conveyed the decision not to allow a third term through the board or some channel the night before the recommendation committee," adding, "Chairman Cho accepted this and reportedly hinted his intention to President Jin, who was the nominee." Another official said, "There was no pressure like that on Son Tae-seung, Chairman of Woori Financial Group, but looking back, there were various warning signs from about four months ago," and added, "Perhaps the signals sent by the political circles were overlooked."

Chairman Cho citing the Lime crisis as one of the reasons for his sudden resignation is also considered a significant point. The Lime crisis is the biggest recent issue related to CEO appointments in the financial sector. Son Tae-seung, Chairman of Woori Financial Group, received a severe disciplinary action called a "written warning" last month. Disciplinary actions above a written warning are classified as severe, restricting employment in the financial sector for 3 to 5 years, making reappointment impossible unless a lawsuit is filed. Financial Supervisory Service Governor Lee Bok-hyun also stated at the time of Son's disciplinary action, "I believe (Son) will make a wise decision."

However, it was Chairman Cho who first declared his resignation citing the Lime crisis. In July, Chairman Cho received a mild disciplinary action of "caution" related to the Lime crisis, which is the lowest level of discipline. After the recommendation committee on the 8th, Chairman Cho told reporters, "Many customers suffered damages due to the Lime crisis, and many employees also received disciplinary actions," adding, "Personally, I received a caution at the disciplinary hearing, but I thought someone should take overall responsibility and sort things out."

Meanwhile, starting with Chairman Cho's questionable resignation, a "big bang" seems to be unfolding in the financial sector. NH Nonghyup Financial Group, which had high expectations for Chairman Son Byung-hwan's reappointment, instead appointed former State Affairs Coordination Office Director Lee Seok-jun, who was part of the acquisition committee, as chairman. BNK Financial Group is also operating an executive candidate recommendation committee after former Chairman Kim Ji-wan resigned mid-term. BNK Financial Group has about 18 internal and external candidates competing. Attention is focused on whether Chairman Son of Woori Financial Group will be reappointed.

Chairman Cho Yong-byeong's resignation, despite being likely to secure a third term, is expected to serve as a kind of "precedent." Financial Supervisory Service Governor Lee Bok-hyun said during a meeting with reporters on the 21st, "I thought Chairman Cho had a possibility of serving a third term, but seeing him give an opportunity to his junior, I personally found it admirable as a leader."

On the night of the 8th, when President Jin Ok-dong was nominated as the next Shinhan Financial Group chairman at the recommendation committee, it is said that President Jin and Chairman Cho shared drinks late into the night.

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