The financial authorities are expected to announce a governance improvement plan aimed at preventing long-term leadership in financial holding companies this month, leading to anticipated changes in the re-election dynamics of major financial holding company leaders. If implemented, the heads of the four major financial groups (KB, Shinhan, Hana, and Woori) will effectively be limited to two terms, paving the way for generational leadership changes starting in 2028.
According to sources in the financial sector, the Financial Services Commission and the Financial Supervisory Service are finalizing the timing for the announcement of the governance improvement plan. While an announcement was initially expected on July 22, no specific schedule has been confirmed yet. The financial community anticipates that the announcement will occur this week or, at the latest, by the end of the month, marking seven months since President Lee Jae-myung criticized financial holding companies as a "corrupt inner circle."
The improvement plan is expected to include measures to legally prohibit the third term for financial holding company chairs, moving away from the previous practice of allowing companies to decide on long-term reappointments autonomously. A special resolution requirement may be applied, requiring more than two-thirds approval from attending shareholders for a second term. Additionally, there are discussions to enhance the independence of outside directors and expand the clawback system for executive bonuses in the event of financial misconduct.
However, analysts suggest that even if the improvement plan is announced, it may not apply immediately to Yang Jong-hee, the chairman of KB Financial Group, whose term ends in November. Although the reform could have been a variable, the process for selecting the next chairman has already begun, making it likely that existing regulations will still apply. Even if the reforms are legislated, the time required for parliamentary discussions and implementation means they are unlikely to be applied to the upcoming KB Financial chairman selection process.
In contrast, significant changes in succession dynamics for other financial holding companies are expected in the medium to long term. Among the four major groups, Chairman Ham, whose term ends in March 2028, will be the first to step down. However, he is ineligible for a third term due to internal regulations that prohibit reappointment beyond the age of 70. Jin Ok-dong, chairman of Shinhan Financial Group, and Lim Jong-ryong, chairman of Woori Financial Group, successfully secured re-election in March of this year, and they may step down around the end of their current terms in March 2029.
Industry insiders believe that this reform will impact not only term limits but also the overall leadership development and succession programs for future chairpersons. With the end of chairpersons' terms effectively announced, each financial group will need to systematically manage their next generation of leaders and foster internal competition.
A source in the financial sector stated, "There is a consensus on the need to reduce the side effects of long-term leadership and enhance transparency in governance," while also noting, "It is essential to carefully consider the potential drawbacks regarding continuity and expertise in management."
* This article has been translated by AI.
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