[EDITORIALS]No way to run banksLocal commercial banks are being quick to take credit for successful restructuring, after they reported massive profits last year. But there have been some changes for the worse. At the center of the controversy is the government's intervention in key personnel appointments at banks. A typical example is the sudden resignations by the heads of Chohung Bank and Korea Exchange Bank. Arguing that the two bankers had been forced out by outside pressures, unions at those two institutions called the move to select new chief executives a scheme by former and incumbent government officials to take those top positions.
Even without the unions' opposition, there are some suspicious aspects in the resignations by the two bank chiefs. The resignation by the head of Chohung, Wee Sung-bok, is understandable, considering that his term has expired and that Lee Keun-young, the chief financial regulator, has set the principle that heads of banks bailed out by the government should not serve another term. It is hard to understand why Korea Exchange's CEO has suddenly stepped down, with about one year left in his term, although he presided over the bank's return to profitability for the first time since the economic crisis in 1997. The seemingly unnatural resignation has sparked controversy over Seoul's intervention in the banking sector.
The government is the largest shareholder of both banks. If the government attempts to appoint top managers of those institutions as it pleases, there is no way to stop it. The problem is that continued government involvement in banks' personnel affairs will deteriorate the local banking system. We have learned the hard way that as a result of the government's control over the appointment of bankers, Korean banks lost their management independence, ending with huge amounts of bad loans. If independent management is not guaranteed, banks that received government bailouts will go back to what they used to be - banks without owners. If the government cannot allow business corporations to own commercial banks, it should at least give banks back the right to make appointments on their own.