[FOUNTAIN]Diversity among bank headsIt was the day before a shareholders’ meeting of a commercial bank that had changed its name after a merger. On that February afternoon in 1992, managing director Mr. K was packing his personal belongings in his office. Mr. L, the bank’s president for four years, was to remain in that position, and Mr. K, who had spent four years as a managing director, had to leave. Then, the tables turned the next morning. High-ranking government officials had a change of heart and wanted another figure to head the newly merged bank. Mr. K moved into the office formerly occupied by Mr. L.
The bank revised its articles of association on the morning of the meeting so that it could have Mr. L as a standing chairman of the board of directors. While shareholders approved the revision, bank officials were nervous since notice of any change in the articles of association was supposed to be given in advance of a meeting. If any shareholder filed a suit to reverse the revision within two months, the company had to hold a meeting again. No objection came.
In order to become a bank president, it was advisable to be well-connected in the government. Powerful figures often competed to have their candidate appointed. Every regime change brought rumors that the bank heads would be reshuffled. After the 1997 financial crisis, the government gained major stakes in many banks as it used public funds to rescue them. The government thus had a reason to meddle in personnel appointments. Now, government officials have become more sensitive about market pressure and cannot intervene in appointment decisions in banks with foreign capital or solid shareholders.
The biggest change is in the background of the bank heads. Kookmin Bank president Kim Jung-tae, formerly president of Dongwon Securities, was the first official from the securities business to hold the top post at a bank when he was named president of the Housing and Commercial Bank in 1998. Until then, most presidents were chosen from among a bank’s employees.
Chohung Bank will officially name a new president on Aug. 26 who has been with a foreign bank. Now, Shinhan and Hana banks are the only two headed by presidents chosen from within the organizations. Bank staff members who had dreamed of leading their own banks one day must feel hopeless. Like the backgrounds of the presidents, we expect to see diverse faces in the banks.
by Lee Se-jung
The writer is a deputy business news editor of the JoongAng Ilbo.