(Seoul = Yonhap News) Reporter Bae Young-kyung = Financial Supervisory Service Chairman Lee Chan-jin convened the chairman of the bank holding companies on the 23rd and once again emphasized the fairness and transparency of the selection process for CEOs of financial company subsidiaries and ordered them to quickly make up for any shortcomings before the start of the appointment process.
Director Lee made this announcement at a meeting with the Chairman of the Korea Federation of Banks and the Chairman of the 8 largest bank holding companies at the head office in Yeouido, Seoul this morning.
He said, โSince the beginning of this year, financial authorities and the financial sector have been thinking about ways to avoid CEO entrenchment and improve the succession process fairly,โ and added, โPlease make efforts to ensure that subsidiary CEOs are appointed according to a transparent and fair process.โ
He then mentioned 'Daegongmusa', which means fairness without personalism, and added, "The CEO selection process should be operated as a process of selecting the right person based on ability, without being buried in a specific faction or pro-Soviet relationship."
In particular, he mentioned the specific qualifications of the CEO and the minimum verification period for each evaluation stage, and ordered, "Holding companies that have not yet established basic and core procedures should promptly supplement any shortcomings before commencing the appointment process."
In addition, it was stated that the holding company's self-appointment committee (subsidiary CEO candidate recommendation committee) must ensure that the subsidiary's hiring committee (executive candidate recommendation committee) performs a substantive role in accordance with the purpose of the Financial Corporation Governance Act.
Specifically, he requested that sufficient information be provided, including permanent CEO candidates, and that the opinions of the appointment committee members be reflected when evaluating CEO candidates.
Cho Yong-byeong, chairman of the Federation of Banks, responded, โWe will actively cooperate in balanced local development, improvement of governance structure, and strengthening of internal control in line with the status of bank holding companies in the financial industry.โ
The Financial Supervisory Service reported that the presidents of bank holding companies also said they would carefully look into areas for improvement in the subsidiary CEO appointment process.
Previously, at the Financial Supervisory Service executive meeting on the 15th, Director Lee emphasized fairness and transparency in the appointment of CEOs of financial holding subsidiaries. As we enter the end-of-year greeting season while the authorities have not announced a plan to improve governance, they appear to be issuing a series of messages to brighten the mood.
Director Lee also mentioned competition in local government treasury bidding.
He pointed out, "Recently, voices are growing concerned about excessive competition between banks in the bidding process," and "The sight of a bank with a relative advantage in capital being selected as the final successful bidder through a competition for cooperation project costs is like unfair competition taking place on a tilted playing field."
Director Lee said, โThe operation of local government safes must also take into account the national tasks of โintra-regional fund circulationโ and โbalanced local development,โโ and announced that he would closely examine the impact of the bankโs expenditure on local government-related cooperation projects on soundness and profitability.
In addition, he said, โRecently, the number and amount of financial accidents, such as embezzlement, breach of trust, and bribery, have been continuously increasing, and the scale of the accidents is also increasing,โ and requested that special attention be paid to organizational culture to ensure that internal control is actually effective.
According to the Financial Supervisory Service, financial accidents in the banking sector increased from 33 cases (KRW 69.69 billion) in 2023 to 47 cases (KRW 170.82 billion) as of July this year. Fraud by outsiders, such as forgery and falsification of income and employment certificates, and accidents related to overseas stores where the internal control of the head office is difficult to reach have also increased.
