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[FOUNTAIN]Banks still touched by a visible hand

Ten years ago, in Nov. 1994, Yun Sun-jeong suddenly resigned as president of Hanil Bank, which has since been absorbed by Woori Bank. While away from Seoul, he faxed in his resignation letter, in which he wrote, “Above all, I would like to clarify that my decision was not influenced by others.” But hardly anyone believed this. Anonymous letters attacking his leadership had been sent to financial authorities, and there were rumors that the new administration wanted him to step down.
In the past, it was considered natural for a bank president with political ties to resign when “his” politicians lost power. Rumors of resignation would sweep the banking world; since everyone has a skeleton in his closet, many heads of banks resigned for ambiguous reasons. The Kim Young-sam administration proclaimed in 1993 that it would not meddle with banks’ personnel arrangements. But right after Mr. Kim’s inauguration, the presidents of Seoul Sintak Bank, Boram Bank (later acquired by Hana Bank) and Jeil Bank resigned. The president of Korea Exchange Bank stepped down only a month after his appointment. Some who refused to resign were charged with financial misconduct and ended up in jail.
Largely because of the financial crisis, the Kim Dae-jung administration did not force bank heads to step down. Instead, the government had virtual decision-making power in appointing executives of banks that received public funds in the course of restructuring. Banks began to appoint heads with no banking background, for the sake of new leadership. This is when Kim Jung-tae, then president of a securities company, was named head of Korea Housing Bank, since absorbed by Kookmin Bank.
Mr. Kim, whose term ends in October, is unlikely to be reappointed. He is expected to be reprimanded for an accounting blunder in Kookmin Bank’s acquisition of a credit card company. The bank claims that financial experts and the National Tax Service had approved the project. In the banking sector, the government is criticized as having punished Mr. Kim for being uncooperative. Mr. Kim did not follow the administration’s financial policy, including the plan to aid LG Card. Finance and Economy Minister Lee Hun-jai has lauded the market economy. As Mr. Lee’s team is criticized for meddling with the private sector, how will the market react?

by Lee Se-jung

The writer is an editorial writer for the JoongAng Ilbo.