Cleaning up the KB messThe state financial regulator chief slapped heavy penalties on KB Financial Group Chairman Lim Young-rok and KB Kookmin Bank President Lee Kun-ho, prohibiting them from any executive job in the financial sector for the next three years.
Choi Soo-hyun, governor of the Financial Supervisory Service, ignored the institution’s sanctions review committee recommendation to let them off the hook with verbal warnings for their much-publicized power struggle and instead more or less handed out a dismissal notice, saying their conflict had seriously damaged the banking group’s reputation and operation. The penalty level allows the two men to finish their terms, but they will be banished from the sector for the following three years.
Someone with executive status can hardly maintain their effectiveness in office while facing a pending ban on working in the field. Lee immediately stepped down, and Lim should now follow suit. The fight began over the replacement of the bank’s computer system. But the power struggle between a group head handpicked by the government and a subsidiary head who had worked his way up in the bank was at the heart of the feud.
Management of the country’s largest financial group has been at a standstill for nearly half a year due to the conflict between the parent group and its flagship bank. Yet their joint exit could result in a leadership vacuum. However, the financial group would suffer more if they stayed. The focus is now on the incoming leadership. The FSS ordered the holding company and bank boards to come up with their own normalization plans. But whether the board members who played an active role in the feud can be relied upon to normalize KB operations is questionable.
Financial authorities must quickly come up with a new guideline to ensure stable ownership and management of financial institutions that do not have single owners. Matters that need to be addressed include the organization of boards and the selection of group and unit heads. Most importantly, revolving-door practices must end. A new ownership structure must be designed to ensure that financial entities run smoothly and competitively to serve shareholders, clients and employees. We should no longer let the gigantic financial company go astray.
JoongAng Ilbo, Sept. 5, Page 30