[비즈한국] Recently, rumors of the reappointment of Im Jong-yong, Chairman of Woori Financial Group316140, have been circulating in the financial sector. Since Chairman Im took office, Woori Financial Group has seen its performance improve and successfully strengthened its non-banking sector by acquiring Tongyang Life Insurance082640 and ABL Life Insurance. However, the group's performance in the first quarter of this year has not matched that of last year, making second-half performance a crucial factor. The political situation is also a variable. Chairman Im Jong-yong is a figure who was heavily utilized during the administration of the People Power Party and its predecessors. Because of this, analysts suggest that if Lee Jae-myung, the presidential candidate of the Democratic Party of Korea, is elected, it may be difficult for Chairman Im to maintain a smooth relationship with the government.
Success in Strengthening the Non-Banking Sector
The acquisition process for Tongyang Life Insurance and ABL Life Insurance by Woori Financial Group has entered its final stages. On May 2, the Financial Services Commission stated, "In our regular meeting, the Financial Services Commission approved the incorporation of Tongyang Life Insurance and ABL Life Insurance as subsidiaries of Woori Financial Group," and added, "We have imposed ancillary conditions, including that Woori Financial Group must faithfully implement its submitted internal control improvement plan and mid-to-long-term capital management plan, and report the status of implementation to the Financial Supervisory Service on a semi-annual basis until the end of 2027."
Woori Financial Group plans to complete the incorporation of the subsidiaries by holding general shareholders' meetings for Tongyang Life Insurance and ABL Life Insurance in July to appoint new management. With this, the long-cherished goal of "strengthening the non-banking sector" has been achieved. The attention of the financial sector is now turning to Chairman Im Jong-yong. Some in the industry are mentioning the possibility that Chairman Im might seek reappointment, buoyed by his success in strengthening the non-banking sector. Chairman Im's term ends in March of next year.
Since Chairman Im Jong-yong took office, Woori Financial Group's performance has increased. Operating profit grew by 21.61% from 3.499 trillion KRW in 2023 to 4.2552 trillion KRW in 2024. However, the performance for the first quarter of this year is lower than that of last year. Woori Financial Group's operating profit for the first quarter of this year was 896.3 billion KRW, a 24.58% decrease compared to the 1.1507 trillion KRW in operating profit from the first quarter of last year.
Competitors such as KB Financial Group105560, Shinhan Financial Group, and Hana Financial Group086790 also saw a year-on-year decline in operating profit for the first quarter of this year. However, the decline in operating profit for KB, Shinhan, and Hana Financial Groups was in the 2-6% range, which is a smaller drop compared to that of Woori Financial Group. Choi Jung-wook, an analyst at Hana Securities, analyzed the worsening performance of Woori Financial Group by stating, "This is because cost-side burdens, such as surging selling and administrative expenses and increased credit loss provisions, have grown significantly."
For Chairman Im Jong-yong, driving up performance in the second half of this year is essential to increasing his chances of reappointment. Starting in the second half, the performance of Tongyang Life Insurance and ABL Life Insurance will also be reflected in Woori Financial Group’s results. However, the fact that Tongyang Life's recent performance has been on a downward trend is a source of anxiety. Tongyang Life's operating profit fell by 33.24% from 87.9 billion KRW in the first quarter of last year to 58.7 billion KRW in the first quarter of this year.
Will the Presidential Election Act as a Variable?
Some analysts suggest that the biggest variable for Chairman Im Jong-yong's reappointment is not performance, but the presidential election. Chairman Im held key roles when parties associated with the People Power Party were in power. He served as Minister of the Office for Government Policy Coordination during the Lee Myung-bak administration and as Chairman of the Financial Services Commission during the Park Geun-hye administration. There was talk that when Woori Financial Group appointed Chairman Im, it kept its relationship with the Yoon Suk-yeol administration in mind. It is reported that former President Yoon Suk-yeol considered Chairman Im for the position of Deputy Prime Minister for Economy when he first took office.
For this reason, when Chairman Im Jong-yong took office in 2023, critical voices emerged from the Democratic Party of Korea and civil society. At the time, members of the National Assembly's National Policy Committee from the Democratic Party announced, "What is worrying about Chairman Im's return is not simply that he was a former bureaucrat, but that he is the person responsible for major policy failures," adding, "If he reflects on his past policy errors, he should stop his bid for Woori Financial Group chairman."
Civic groups such as the Citizens' Coalition for Economic Justice, People's Solidarity for Participatory Democracy, and Financial Justice Solidarity also criticized him, saying, "Appointing Chairman Im Jong-yong, who is unfit to lead Woori Financial Group due to his responsibility for the private equity fund scandal and numerous financial accidents, at the mere word of the President is the pinnacle of parachute-style government-controlled finance," and "It is difficult to understand why the government intervenes in the appointment of financial holding company chairmen by citing the reason that finance is a public good."
Currently, in presidential election polls, Lee Jae-myung of the Democratic Party of Korea is in first place. There is a prospect that if candidate Lee Jae-myung is elected, the relationship between Chairman Im Jong-yong and the government will not be the same as before. Chairman Im did not have any notable activities during the Moon Jae-in administration.
While the two do not have a special connection, candidate Lee Jae-myung once opposed Chairman Im Jong-yong's appointment as Deputy Prime Minister for Economy in the past. This was in November 2016, when President Park Geun-hye nominated Chairman Im as Deputy Prime Minister for Economy. Candidate Lee Jae-myung posted on social media, "(Former President Park Geun-hye) is not in a position to make appointments, but to be investigated," adding, "A president who is about to step down has no power to make appointments." Ultimately, as former President Park Geun-hye was impeached, Chairman Im's appointment as Deputy Prime Minister for Economy did not take place.
The Woori Financial Group's Executive Recommendation Committee is composed of outside directors. Most of them are from the financial sector, and it is difficult to find members with deep ties to political circles. They are highly regarded in terms of strengthening professionalism. However, as they do not have a political affiliation, it is interpreted that this will not have a significant impact on Chairman Im's reappointment. Chairman Im's side has not yet revealed a specific stance regarding his reappointment.