Revamp KB governance

KB Financial Group and a handful of other financial institutions will be hit with the heaviest and most widespread penalties in the history of the Financial Supervisory Service, dealing a blow to the credibility of the entire sector. The FSS said as many as 200 people in nine financial institutions will be penalized.

In that group are KB Group Chairman Lim Young-rok and Kookmin Bank CEO Lee Kun-ho. They have been found responsible for massive leaks of personal customer information last year that were discovered in January, as well as other mismanagement and breach of trust issues. About 120 of the 200 are employees of KB Financial Group and Kookmin Bank. Mass-scale dismissals of financial executives could seriously undermine operations of the country’s largest lender and other institutions.

Despite the heavy punishment, the group chairman and bank president continue with the blame game and power struggle. Regardless of the financial authority’s interference and penalties, these corporate leaders are hardly fit to manage a financial giant. The chairman, bank CEO and bank board members were involved in a nasty feud about replacing the bank’s computer network.

Such an eyesore is unimaginable in a financial giant of KB’s scale and for financiers who should prize discipline and trust. None of them appeared to have any of the work ethic or sense of responsibility demanded of financial executives. The entire top management cadre of KB should be replaced.

KB’s internal strife has been caused by revolving-door practices. Corporate executives and leaders handpicked by the financial authorities clashed with inside members. If the revolving-door tradition continues, KB without outright ownership will likely be swept up in feuds.

KB has no future as long as board members collude and fight to seat their favored candidates in executive seats. The board membership and executive appointments need to be revamped. The financial authority must come up with desirable changes to the ownership of financial holding companies in order to prevent internal strife from ruining the management and credibility of the financial industry.

JoongAng Ilbo, June 12, Page 34