[비즈한국] As financial authorities have begun full-scale efforts to overhaul the governance structures of financial firms, signs of change have emerged in the board compositions of major financial holding companies. This follows the announcement of new outside director candidates ahead of the regular general shareholders' meetings in March. However, with the exception of a few, the scale of turnover among outside directors remains small, leading to skepticism about whether the authorities' pressure will translate into genuine personnel reform.
Financial authorities announced that they launched a "Governance Advancement TF," involving institutions, researchers, academia, and the legal sector, in January to prepare institutional improvement plans by March. Key discussion tasks include enhancing board independence, improving the fairness and transparency of CEO appointments, and rationalizing performance-based compensation. They are also considering revisions to the Act on Corporate Governance of Financial Companies.
The authorities are targeting financial firm governance because President Lee Jae-myung ordered improvements to governance issues during the Financial Services Commission's year-end report for 2025. Addressing the structure where financial holding company chairmen also serve as bank presidents, President Lee pointed out, "Since the government does not intervene, they form a 'corrupt inner circle' where a small minority takes turns exercising control." In response, Lee Chan-jin, Governor of the Financial Supervisory Service, stated, "This happens fundamentally because the independence of board functions is insufficient. Financial holding companies, in particular, are problematic. There is a task to improve the structural issue where boards are composed primarily of people connected to the chairman. Currently, there is no authority under the Governance Act to inspect, supervise, or sanction them."
Prior to the work report, Governor Lee also mentioned governance improvement plans during a meeting on December 10 with the CEOs of eight financial holding companies (KB, Shinhan, Hana, Woori, NH NongHyup, iM, BNK, and JB) and the Chairman of the Korea Federation of Banks. Governor Lee said that day, "We must form candidate recommendation committees with independence and ensure fair operation by diversifying pathways for recommending outside directors—such as through shareholder recommendations from institutions representing the entire nation—and differentiating the terms of outside directors. Additionally, we will actively push for boards that include at least one outside director representing IT security or financial consumer sectors."
Because of this, the market is closely watching whether financial holding companies will replace their outside directors ahead of the regular shareholders' meetings in late March. So far, BNK Financial Group has shown the most significant change. Having been a target of governance controversy due to the chairman's reappointment last year, BNK Financial Group introduced an open shareholder recommendation system for outside directors this year and replaced five out of seven outside directors whose terms were expiring. The five new candidates selected through the recommendation committee consist of two from the legal field (Cha Byeong-jik, Kang Seung-soo), one from finance (Lee Nam-woo), one from finance/accounting (Park Geun-seo), and one from IT (Park Hye-jin).
However, little change was seen in the other financial holding companies. Most of the outside directors whose terms were expiring were reappointed, with only one or two new appointments made. Woori Financial Group has the highest replacement rate; out of three outside directors whose terms were expiring, only Yoon In-seop, an outside director of Woori America Bank, was reappointed, while two were newly appointed. The areas of expertise for the new candidates are balanced. Candidate Ryu Jung-hye is an AI expert who worked at Naver and Kakao Entertainment and is currently a member of the President’s National AI Strategy Committee, while candidate Jung Yong-geon is a financial consumer protection expert who has served as the head of the Financial Watch Center and a non-executive director of the National Pension Sharing Foundation.
Shinhan Financial Group appointed two new directors out of seven whose terms were ending. Of the two, candidate Park Jong-bok is a former president of SC First Bank, and candidate Im Seung-yeon is a former US Certified Public Accountant. JB Financial Group appointed two new directors out of six. Among the new directors, candidate Baek Young-hwan is a lawyer who previously worked at the Seoul Metropolitan Police Agency, and candidate Lee Dong-chul served as Vice Chairman of KB Financial Group and CEO of KB Kookmin Card.
KB Financial and Hana Financial replaced only one outside director each. KB Financial is appointing one new director out of five whose terms were expiring. Candidate Seo Jung-ho is a managing partner at the law firm The Wiz and has served as a member of the FSS Sanctions Review Committee and the FSC Financial Development Review Committee. He is also currently a legal advisor to the Seoul Regional Tax Office. Hana Financial is reappointing seven out of eight outside directors whose terms were expiring. Candidate Choi Hyun-ja, who will become a new outside director, is a professor of consumer studies at Seoul National University and former president of the Korea Association of Consumer Studies. She is currently serving as an outside director for Hana Bank but is scheduled to step down at this shareholders' meeting.
As Governor Lee Chan-jin emphasized IT security and financial consumer protection, the expertise of the new candidates also drew attention. In the case of BNK Financial, none of the five new outside directors were specialized in financial consumer protection. Woori Financial secured one expert each in IT (AI) and financial consumer protection. Hana Financial recommended a candidate in the field of financial consumer protection.
Among the eight financial holding companies, some have yet to disclose their outside director candidates. In the case of iM Financial, three outside directors' terms expire at the March 2026 general shareholders' meeting. NH NongHyup Financial also has three outside directors whose terms expire between March and April.
The market evaluation is that despite the financial authorities' pressure to improve governance, the effect of personnel reform has been minimal. The Governance Advancement TF is expected to announce its improvement plan later this month. An industry official stated, "Personnel turnover does not necessarily mean improvement, but since the replacement rate of outside directors at major financial holding companies is negligible, it seems the effect of the pressure is not significant."