Financial Supervisory Service (FSS) Governor Lee Chan-jin said at an executive meeting that succession procedures at most financial holding companies lacked clear standards for choosing subsidiary chiefs.
Lee identified several weaknesses, including vague qualification standards for chief executives and insufficient time to review candidates at each stage. He also said candidate pools were not actively managed and the shortlisting and review process lacked transparency.
Under industry governance guidelines, only some financial holding companies share information on standing CEO candidate pools with subsidiaries or allow bank nomination committees to recommend candidates, according to the filing.
"Transparency and fairness should be strengthened throughout the entire CEO succession process, including candidate selection, verification, evaluation and record keeping," Lee said.
The remarks come as financial authorities review corporate governance practices across the sector through a task force that has been operating since January.
Lee said the group had discussed measures aimed at preventing executive appointments from being decided through closed processes based on internal factions or personal ties.
He urged financial companies to establish more transparent and credible succession systems that can also support shareholder value.
The regulator said it would closely check whether financial companies follow clear and fair rules when choosing CEOs.
AJP Takeaways
- South Korea's financial regulator called for stronger safeguards in CEO succession at financial holding company subsidiaries.
- FSS Governor Lee Chan-jin cited vague qualification standards, insufficient review periods and largely formal candidate-pool management.
- The FSS said it would strengthen scrutiny of whether CEO appointments follow transparent and fair standards.
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