NH Finance seeks new chairman

Nonghyup Financial Group is expected to form a special five-member committee next week to accelerate the process of nominating a new chairman.

The move comes as Shin Dong-kyu, head of the institution, abruptly offered to step down Wednesday amid growing internal conflict and repeated security problems.

According to industry sources, Nonghyup Financial, which is fully owned by the National Agricultural Cooperative Federation, will form a special committee next week to nominate a new chairman to succeed Shin. The committee will be comprised of two outside directors, two outside experts and one official recommended by the cooperative. The new chairman will be picked as early as mid-June.

Shin’s offer to resign was a surprise because he was appointed last June for a two-year term. Some analysts credit the change in administrations as the cause. Shin, former head of the Korea Federation of Banks, was considered close to former President Lee Myung-bak and he graduated from the same high school as Lee’s economic mentor, Kang Man-soo, who stepped down last month as chairman of the Korea Development Bank Financial Group.

Nonghyup Financial said in a statement Wednesday, “Chairman Shin offered his resignation to the largest shareholder, the cooperative federation, thinking it would be better for a more talented official to head a financial institution that has recently been experiencing difficulty.”

While some industry insiders say Shin is stepping down to take responsibility for recent security problems at the institution, others say there was internal conflict between Shin and Choi Won-byeong, chairman of the National Agricultural Cooperative Federation.

“The financial regulator [Financial Supervisory Service] did not ask me to take responsibility for recent security problems,” Shin told the JoongAng Ilbo Wednesday. “But there was conflict with the agricultural cooperative federation.”

There have been concerns rising over the security at Nonghyup Financial as the whole system is managed and operated by the federation. Nonghyup uses the same computer network across affiliates, which introduces more vulnerability.

In an interview with the JoongAng Ilbo, Shin also said, “There were too many restrictions in managing the business.”

Nonghyup Financial Group was established in March 2012 after the financial division of the agricultural cooperative Nonghyup spun off from other businesses like retail and distribution.

By Lee Eun-joo [angie@joongang.co.kr]