[비즈한국] With the term of NH Investment & Securities005940 CEO Yoon Byung-woon nearing its end, the financial sector is paying close attention. CEO Yoon has led a rise in NH Investment & Securities' performance and received favorable evaluations, making his reappointment seem likely. However, the National Agricultural Cooperative Federation (NACF) is considered a key variable. It is reported that the NACF and NH Financial Group were involved in a conflict last year over the authority to appoint the CEO of NH Investment & Securities. At the time, financial authorities exerted subtle pressure on the NACF, which led the federation to take a step back. Now, with a change in administration, the heads of financial authorities have also been replaced. As a result, there is an assessment that the NACF is highly likely to exert influence on the appointment of the NH Investment & Securities CEO.
CEO Yoon Byung-woon's term runs until March of next year. He has received decent evaluations, including leading the improvement in NH Investment & Securities' performance this year. The company's net profit increased by 10.03% from 422.7 billion won in the first half of last year to 465.1 billion won in the first half of this year.
NH Investment & Securities recently applied to financial authorities for authorization of its Integrated Management Account (IMA) business. The IMA is a principal-protected financial product offered by securities firms that provides higher interest rates than bank deposits. Once authorized to operate the IMA business, a securities firm can utilize funds received from customers to engage in aggressive investments. In July, NH Investment & Securities received a 650 billion won capital injection from NH Financial Group in the form of a paid-in capital increase to support the IMA business, as current law allows only securities firms with equity capital of 8 trillion won or more to apply for IMA business authorization.
Park Hye-jin, a researcher at Daishin Securities003540, evaluated NH Investment & Securities, stating, "As the performance of most investment banking (IB) businesses has recently improved, entry into the IMA business will serve as a good tool for strengthening the IB business." She added, "(The IMA business) is expected to contribute positively to synergies with the bank and the improvement of IB earnings."
If NH Investment & Securities receives authorization for the IMA business, the evaluation of CEO Yoon Byung-woon is expected to rise. CEO Yoon has also established a mid-to-long-term goal of achieving a return on equity (ROE) of 12% by 2028. At 58, he is also relatively young. Looking only at the visible conditions, the possibility of CEO Yoon's reappointment appears high.
However, the NACF is mentioned as a variable. The largest shareholder of NH Investment & Securities is NH Financial Group, and the NACF holds 100% of NH Financial Group's shares. It follows a governance structure of 'NACF → NH Financial Group → NH Investment & Securities'.
It is reported that there was conflict between the NACF and NH Financial Group when CEO Yoon Byung-woon was appointed last year. At the time, NACF Chairman Kang Ho-dong recommended Yoo Chan-hyung, former Vice Chairman of the NACF, as the CEO of NH Investment & Securities. However, former NH Financial Group Chairman Lee Seok-joon (currently head of CJ Future Management Institute) argued that the NACF should not be involved in the appointment of the NH Investment & Securities CEO. Ultimately, Chairman Kang Ho-dong stepped back, allowing CEO Yoon Byung-woon to be appointed.
The evaluation is that the financial authorities were the background for Chairman Kang Ho-dong stepping back. Then-Financial Supervisory Service Governor Lee Bok-hyun was critical of the governance structure in which the NACF exerts influence over NH Financial Group. In March last year, Governor Lee remarked, "Although (the NACF's) credit and economic businesses are separated, there is a point to consider whether the risks are clearly distinguished," adding, "We need to look into whether there is room for the regulatory system under rational governance laws related to the principle of separating banking and commerce or internal controls to be shaken."
The situation is different now. Chairman Lee Seok-joon stepped down upon the expiration of his term in March this year, and Governor Lee Bok-hyun also stepped down in June this year. Conversely, Chairman Kang Ho-dong's term runs until March 2028, with more than two years remaining. The current Financial Supervisory Service Governor Lee Chan-jin and current NH Financial Group Chairman Lee Chan-woo have not actively expressed their positions regarding the NACF's governance structure.
Since the impeachment political situation of former President Yoon Suk Yeol earlier this year, there have been assessments that Chairman Kang Ho-dong is engaging in "crony appointments." Prime examples are NH Financial Group Board Chairman Kim Byung-hwa and NongHyup Bank President Kang Tae-young. It is known that Chairman Kim Byung-hwa helped Chairman Kang Ho-dong in last year's NACF chairman election. President Kang Tae-young is from the same Gyeongsangnam-do region as Chairman Kang Ho-dong.
In January this year, Democratic Party lawmaker Im Mi-ae pointed out to Chairman Kang Ho-dong at the National Assembly's Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, stating, "Issues regarding the abuse of personnel power have been raised since the end of last year," and "The NACF chairman's reckless personnel decisions are lowering the morale of NACF employees." Chairman Kang replied on that day, "I will ensure that personnel decisions are made transparently and fairly."
Even within NH Financial Group, there is an atmosphere of concern regarding Chairman Kang Ho-dong's intervention in personnel matters. The Korean Financial Industry Union held a meeting with the National Policy Planning Committee in July, stating that they discussed the problems with appointing NH executives and plans for improvement.
As such, although CEO Yoon Byung-woon's performance is not bad, the surrounding atmosphere is unsettling, making his reappointment difficult to guarantee. Of course, the failure of CEO Yoon Byung-woon to be reappointed does not necessarily mean crony appointments by Chairman Kang Ho-dong. Nevertheless, since CEO Yoon has achieved remarkable results this year, a minimum level of justification would be needed if a new CEO were to be appointed.
An official from NH Investment & Securities said, "Since the executive recommendation committee has not yet been formed, no specific schedule regarding the appointment of the CEO has been set." Regarding the NACF's intervention in personnel authority, they did not express a specific position.