DGB Financial Starts Chairman Appointment Race Today... Will Kim Tae-o Challenge for a Third Term? (Comprehensive)

Possibility of Reappointment with Record Performance
Authorities' Negative Perception and Age Limit as Obstacles

Four 'Senior Appointment Principles' Disclosed, Fairness Increased with External Participation
Chairman Candidate Outline by Late February Next Year

DGB Financial Group has officially begun the process of selecting its next chairman. Attention is focused on whether the current chairman, Kim Tae-oh, will challenge a third term, overcoming regulatory authorities' negative perceptions of long-term leadership and age restrictions.

[Image source=Yonhap News]

According to the financial sector on the 25th, the Chairman Candidate Recommendation Committee (CCRC), composed of seven outside directors of DGB Financial, held its first meeting and decided to initiate the CEO (Chairman) succession process. Compared to other financial groups that typically start the CCRC 3 to 4 months before the chairman’s term expires, DGB Financial Group’s timing is relatively early. Chairman Kim’s term lasts until March next year, with about six months remaining. In 2019, DGB Financial revised its regulations to start the succession process six months before the chairman’s term expires, aiming for thorough candidate verification.

The CCRC plans to finalize the candidate pool by receiving recommendations from both internal and external sources, then narrow down from a first-round candidate group (longlist) of about 10 people → a second-round candidate group (shortlist) of 3 to 4 people → to a final candidate of one person. A one-month evaluation program will also be conducted for candidates on the shortlist. Since DGB Financial’s shareholders’ meeting is usually held in March, the next chairman’s outline is expected to be revealed around the end of February next year. This is because the board of directors must convene and decide on internal directors, including the chairman, and submit agenda items for the shareholders’ meeting at least one month prior.

Four major ‘appointment principles’ were also disclosed on the day: ▲ securing procedural legitimacy and transparency ▲ enhancing diversity in candidate composition and fairness in evaluation ▲ selecting a final candidate with qualifications and capabilities ▲ improving the independence of the Chairman Candidate Recommendation Committee.

This chairman selection process reflects the results of external consulting on ‘governance advancement’ conducted over three months since May. By including external candidates and involving external professional organizations and CCRC members, the objectivity of candidate composition and fairness of evaluation have been strengthened. In particular, to ensure fairness in evaluating internal and external candidates, plans are underway to introduce ‘personality and aptitude assessments’ and ‘financial and management expertise interviews’ conducted by external professional organizations.

Choi Yong-ho, chairman of the CCRC, stated on the day, “We will fulfill our role fairly and transparently from an independent position to find the best candidate who will contribute to DGB Financial’s successful transition to a commercial banking group and sustainable growth.”

Kim Tae-oh, Chairman of DGB Financial Group, is attending a meeting between financial authorities and bank holding company chairmen held at the Bankers' Hall in Jung-gu, Seoul on the 5th. Photo by Yoon Dong-joo doso7@

Attention is focused on whether Chairman Kim will attempt a third term. Kim, who took office in 2018, succeeded in his second term in March 2020 and has been leading DGB Financial for six years. Internally, the need for reappointment is raised due to the record-high net profit of 309.8 billion KRW in the first half of this year and the necessity to stably promote the transition of the core affiliate, Daegu Bank, into a commercial bank.

However, there are significant obstacles. First, financial authorities have expressed a negative view of long-term leadership by financial company heads. Major financial group chairmen have been successively replaced. Former Shinhan Financial Group Chairman Cho Yong-byeong, former NH Financial Group Chairman Son Byung-hwan, and former Woori Financial Group Chairman Son Tae-seung, all expected to be reappointed, have declared their retirement and stepped down. At KB Financial Group, where the chairman selection process is currently underway, the current chairman Yoon Jong-kyu has also decided to retire early.

The ‘age limit’ is another challenge to overcome. Article 15 (Director’s Term) of the internal governance regulations in DGB Financial’s ‘Governance and Compensation System Annual Report’ stipulates that “the chairman cannot be appointed or reappointed if over 67 years old.” Chairman Kim is currently 68 years old, so to challenge reappointment, he must obtain the attendance and approval of the majority of the eight board members to amend this regulation. Since Chairman Kim himself is included on the board, this raises concerns about a ‘self reappointment’ controversy. A financial sector official said, “Considering public opinion, it will not be easy to hold a board meeting to change internal regulations by oneself for a reappointment challenge while the CCRC process is ongoing.”

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