Yang Jong-hee's reappointment as chairman of KB Financial Group has fallen through, drawing attention to the future of CEO appointments in the financial sector. The decision to opt for generational change over the current chairman, who has maintained strong performance, raises questions about its impact on the industry’s hiring trends.
On September 13, the KB Financial Chairman Candidate Recommendation Committee announced that Lee Jae-geun, head of KB Financial Group's division, has been selected as the final candidate for the next chairman. Given KB Financial's strong performance, with annual net profits projected to reach 6 trillion won, the outcome was unexpected.
This choice is particularly noteworthy as recent appointments in financial holding companies have largely favored the reappointment of sitting chairmen. For instance, Ham Young-joo of Hana Financial was reappointed last year, and in March, Jin Ok-dong of Shinhan Financial and Im Jong-ryong of Woori Financial also secured reappointments. KB Financial is the only one among the four major financial groups to replace its sitting chairman.
The committee cited 'bold change and generational transition' as the rationale behind this decision. Cho Hwa-jun, the committee chair, stated, "It is time for bold changes and generational transitions to enhance the group's fundamental competitiveness and secure future growth drivers, rather than resting on current achievements."
KB Financial's decision aligns with ongoing discussions regarding improvements to governance structures in financial holding companies. President Lee Jae-myung highlighted the issue of reappointment practices among financial holding chairmen during a report to the Financial Services Commission last December. Since then, financial authorities have been discussing improvements to governance structures, including CEO succession processes and board independence.
In this context, KB Financial's choice to pursue generational change instead of reappointing the sitting chairman may reflect considerations of potentially strengthened governance regulations. The government has indicated a desire to address issues related to long-term reappointments and so-called 'self-reappointments' among financial holding CEOs, suggesting that KB Financial may be responding to this policy direction.
As interest grows regarding whether KB Financial's decision will influence broader hiring trends in the financial sector, attention also turns to the reappointment prospects of Lee Chan-woo, chairman of NH Nonghyup Financial Group, whose term expires on February 2 next year. NH Nonghyup is expected to initiate its management succession process three months prior to the chairman's term expiration, indicating that discussions about the next chairman will likely intensify alongside year-end appointments for its affiliates.
By the end of this year, the terms of 54 CEOs across the five major financial holding companies will expire, including 10 from KB Financial, 12 from Shinhan Financial, 13 from Hana Financial, 12 from Woori Financial, and 7 from Nonghyup Financial.
Particularly within KB Financial, there is speculation about how Yang's failed reappointment may affect the tenure of Lee Hwan-joo, the CEO of KB Kookmin Bank. Given the change in the group chairman, adjustments in the appointments of affiliate CEOs may be inevitable, suggesting that the selection of the next KB Kookmin Bank CEO may prioritize generational change and new management directions over continuity with the existing leadership.
Kim Dae-jong, a professor at Sejong University’s Business School, remarked, "The KB Financial committee's decision is likely to have a significant impact on other financial holding companies. In particular, when deciding on the reappointment of sitting chairmen, there will be a stronger emphasis on evaluating not just management performance but also the transparency of CEO succession processes, the independence of the recommendation committee, and governance risks associated with long tenures."
* This article has been translated by AI.
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