Financial Supervisory Service Governor Lee Chan-jin has instructed staff to examine whether candidate selection for chief executive posts at financial holding companies' subsidiaries was conducted fairly, once the year-end appointments are completed. The directive signals that regulators intend to scrutinize the entire succession process as major financial holding companies begin picking the heads of their units, including bank chiefs.
Lee issued the instruction to the relevant departments at a meeting of FSS deputy governors on the 26th, according to financial authorities. The move follows calls raised during a recent parliamentary audit by the National Assembly's National Policy Committee for a review of CEO succession procedures at financial holding companies' subsidiaries.
Lee stressed that the entire process — from drawing up candidate pools to vetting and evaluation — must be transparent and fair, carried out in line with established standards and procedures, officials said. He is also said to have instructed staff to verify, once the year-end appointments wrap up, whether the succession process matched the financial authorities' direction on governance improvement and best practices.
Lee has repeatedly underscored the need to review CEO selection procedures in the banking sector. At the National Policy Committee audit on the 19th, he said, "Even before the governance law is revised, we will broadly review the selection procedures currently used in the banking sector and verify whether governance improvement is actually taking place." At an executive meeting on Sept. 15, he said, "We understand that the subsidiary CEO succession procedures established by most holding companies' subsidiary CEO nomination committees are inadequate, and that the role of the subsidiaries' executive nomination committees is also limited. We will step up checks on whether CEO succession proceeds under transparent and fair standards."
Major financial holding companies are moving ahead with the selection of subsidiary chiefs. Hana Financial Group narrowed the candidate pool to three or fewer for each of six main subsidiaries on the 26th — Hana Bank, Hana Securities, Hana Card, Hana Capital, Hana Life and Hana Savings Bank. NH Nonghyup Financial Group will finalize the long list of candidates for its subsidiary CEO posts on the 28th.
The financial authorities' push on governance is also gathering pace. Lee is expected to hold a closed-door meeting with the board chairs of major financial holding companies on the 28th, where he will personally urge greater transparency and fairness in the selection of subsidiary chief executives.