Investors Increase Bank Clout

Domestic banks' largest foreign shareholders are using their power in selecting bank presidents.

Henry Cornell, managing director of Goldman Sachs, the largest shareholder of Kookmin Bank, called Friday for Kim Sang-hoon, the incumbent president of Kookmin Bank, to be named the chief executive officer to head the Kookmin and H&CB merged bank.

He said Kookmin's businesses, including retail banking, corporate financing and trusts, are more diverse and larger-scale than those of H&CB, and the merger means simply adding H&CB's strong retail financing into Kookmin's diverse business fields. "So I think it is desirable for Kookmin Bank's president to represent the merged bank," Mr. Cornell said, adding that his opinion had already been delivered to the merger committee. He pointed out that Goldman Sachs was the first to make a large-scale investment, $500 million, when Korea was hit by a foreign currency crisis, and investors all over the world are watching closely the return on that investment.

In response to Mr. Cornell's remarks, one official at H&CB said that the president of the merged bank will be appointed according to an election procedure set up by the merger committee.

The two banks are scheduled to merge in June.

The Carlyle Group, KorAm Bank's largest shareholder, is pursuing a bank management shakeup and wants the bank president, Shin Dong-hyuck, to resign.

"Since the end of last year, we have been discussing the bank's reorganization plans. To help the bank management structure, I have decided to resign my office," Mr. Shin said.

"The Carlyle Group has already recommended two young, competent financial experts as the bank's presidential candidates," he added. President Shin said the bank will soon convene a board of directors meeting to announce his resignation. He added that many other executive officers will also be changed.

by Choi Hyeon-chul / Oh Jung-hee