Shinhan Financial Group's 9 Major Affiliates to Proactively Introduce Accountability Structure Diagram

Shinhan Financial Group's nine major affiliates will proactively introduce and operate a responsibilities map ahead of the submission deadline under the revised "Act on the Governance of Financial Companies (Governance Act)."

According to the Financial Supervisory Service's electronic disclosure system on the 18th, Shinhan Financial announced in the explanatory materials for the agenda of the regular shareholders' meeting to be held on the 26th that it will proactively introduce the responsibilities map for major group companies before the first submission deadline under the Governance Act (January 2025). The Governance Act, scheduled to be enforced in July, stipulates that financial holding companies and banks must submit the responsibilities map within six months after the law's enforcement, while financial investment companies, insurance companies, specialized credit finance companies, and savings banks must submit within one to three years depending on their size.

A responsibilities map is a document that details the specific allocation of responsibilities according to the positions held by executives of each financial company. It was introduced to clearly define the internal control responsibilities and duties of the board of directors, the CEO, and executives for all operations of financial companies, aiming to prevent financial accidents. Specifically, it consists of a document describing the responsibilities by executive position (responsibility description) and a document visualizing the responsibilities structure (responsibility system chart).

Among Shinhan Financial Group companies, the nine affiliates proactively introducing the responsibilities map are Shinhan Financial Group, Shinhan Bank, Shinhan Card, Shinhan Investment Corp., Shinhan Life Insurance, Shinhan Capital, Shinhan Asset Management, Shinhan Savings Bank, Shinhan Asset Trust, and Jeju Bank. Among these, Shinhan Bank completed the first draft of the responsibilities map for the first time in the financial sector and has been developing the implementation system since early this year. Shinhan Card, Investment Corp., and Life Insurance also started drafting the responsibilities map from last year through early this year, becoming the first in their respective sectors.

원본보기 아이콘

Additionally, Shinhan Financial Group and Jeju Bank will begin related procedures from April, while Shinhan Capital, Asset Management, Savings Bank, and Asset Trust will start within the year. Small and medium-sized group companies such as Shinhan DS, REITs Management, Fund Partners, Venture Investment, and EZ Insurance plan to establish and implement internal control management measures equivalent to the responsibilities map.

Shinhan Financial plans to build a three-line internal control system within the group through the responsibilities map. The first line will identify and manage risks inherent in each business and continue internal control reviews and inspections of business activities. The second and third lines will perform internal control tasks in specialized areas. Furthermore, the CEO will be assigned the responsibility for drafting the responsibilities map and overall internal control management, while the board of directors will be responsible for monitoring the appropriateness of the internal control system's operation.

Shinhan Financial also plans to establish a system to strengthen inspections, monitoring, and corrective actions regarding the appropriateness of internal control operations within group companies. Shinhan Financial stated, "According to the Governance Act and the Financial Holding Companies Act, internal controls for each group company will be performed under the responsibility of each board of directors. However, the holding company will actively monitor common or significant issues among group companies and ensure they are reported to the board. Once the responsibilities maps of major group companies are completed, we will also prepare internal control management measures related to management tasks between the holding company and group companies."

Meanwhile, other financial holding companies are also preparing responsibilities maps ahead of the Governance Act enforcement. KB, Hana, and Woori Financial Groups each formed task forces (TFs) last year to prepare responsibilities maps and are reportedly receiving advice from law firms and consulting companies.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.