[Viewpoint] Only the Referees Are Visible, the Players Are Not

The Grip of Financial Authorities Grows Stronger Than Ever
At the Center: Lee Bokhyun, Governor of the Financial Supervisory Service
Even Industry Insiders Ask, "Who Are the Financial Holding Company Chairmen and Bank Presidents?"

During the Lee Myung-bak (MB) administration, the "Four Financial Kings" were widely discussed. This nickname referred to the four financial holding company chairmen: KDB Industrial Bank Holdings (Kang Man-soo), KB Financial Group (Uh Yoon-dae), Hana Financial Group (Kim Seung-yu), and Woori Financial Group (Lee Pal-sung). Their influence, classified as part of MB's network, was tremendous. They controlled personnel appointments and dominated the financial sector. Since under the holding companies they oversaw banks, securities, insurance, credit cards, savings banks, and capital companies?in essence, the entire financial industry?the expression "domination of the financial sector" was not an exaggeration. Controversies over government intervention and parachute appointments were incessant.

Through the Park Geun-hye and Moon Jae-in administrations, insiders took positions as chairmen of the four major financial holding companies (KB, Shinhan, Hana, Woori). Criticism of government intervention and parachute appointments subsided. However, ironically, concerns about governance grew even stronger. Being insiders, their organizational control became firmer, and by filling the boards with their own people, they built solid "trenches." This led to criticism such as "self-renewal of terms" and "monarchical systems."

Now, under the Yoon Suk-yeol administration, the grip of financial (supervisory) authorities on the five major financial holding companies, including NH Financial Group, has become very strong. From governance issues like chairman appointments to bank branches and interest rate guidelines, the level of micromanagement has intensified. At the center of this is Lee Bok-hyun, the Governor of the Financial Supervisory Service (FSS). Although it is not possible to divide matters as sharply as cutting tofu with a knife, in fact, issues related to the governance of financial companies fall more within the jurisdiction of the Financial Services Commission (FSC) chairman than the FSS governor. Yet currently, only Lee's shadow is visible in these areas. As a former prosecutor, Governor Lee is unrestrained. He does not hesitate to meet with financial holding company chairmen and CEOs of financial firms. Even though it is uncomfortable for the head of the supervisory authority to meet with heads of supervised institutions, he readily does so. And he decisively addresses current issues. While he politely bows his head in personnel matters, he hides a dagger aimed at financial sector reform.

If Governor Lee is the bad cop, then Kim Ju-hyun, the FSC chairman, is the good cop. Chairman Kim also comments on governance of financial companies but mostly at a theoretical level. The good-natured Chairman Kim emphasizes harmony. When FSC staff complain about the FSS staff overstepping their authority, Chairman Kim reportedly soothes them by saying, "Aren't we all trying to do well?" It is said that Chairman Kim and Governor Lee communicate almost daily to discuss current issues, so it is reasonable to see Governor Lee taking the lead with Chairman Kim's tacit support.

Regarding the succession structure of financial holding company chairmen, the financial sector watches only Governor Lee's words. This is because an "invisible hand" was already at work during the Shinhan and Woori Financial Group cases. Among them, Governor Lee's voice is considered the loudest. The financial sector is keenly watching the successor to KB Financial Group Chairman Yoon Jong-kyu, whose term expires this November. KB Financial Group, which at least has a well-structured succession roadmap, was mentioned by Governor Lee at an event last June: "KB Financial has a relatively well-organized succession program, but we found some areas that could be improved and conveyed our opinions." Depending on perspective, this can be interpreted as the "invisible hand" starting to operate again.

As the intensity of financial (supervisory) authorities' "pre-supervision and post-inspection" has become so strong, a new controversy over government intervention has arisen. The presence of the private sector is faint, overshadowed by the shadow of the government. A CEO of a financial company said, "Has there ever been a time when the presence of financial company heads has shrunk as much as it has recently? Even within the industry, people do not know who the chairmen and presidents of financial holding companies are." Who would come to a stadium where only referees are visible and players are not?

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