KB Financial chief laws down law
Strict internal controls and unscrupulous ethics are the creed that new KB Financial Group Chairman Yoon Jong-kyoo set for the financial institution Friday.
“We need to create a clean KB that is clear of any accidents,” said Yoon, during his inauguration speech at the financial group’s flagship KB Kookmin Bank’s headquarters in Yeouido, Seoul.
He said only when the group strictly adheres to internal controls and unyielding ethics will it regain customer trust and its past glory as a leading financial institution.
“Due to recent events, we have learned our lesson clearly about upholding customers’ trust,” Yoon said. “Without customers, we don’t exist.”
The chairman’s comments come at a time when the financial group’s public reputation has been severely tarnished due to one of its worst internal feuds that also cost two top executives their jobs.
The financial authority on Thursday announced plans to restructure the financial group’s governance by targeting the qualifications of outside directors.
Since last year, KB Financial Group has been under heavy attack for loan fraud, money laundering and leaks of clients’ personal information from its credit card unit. Matters only got worse when in April, KB Financial Group Chairman Lim Yong-rok and KB Kookmin Bank President Lee Kun-ho were locked in a fierce conflict over switching the bank’s main computer system. It escalated to a point where Lee reported the chairman to the financial authority, accusing him of distorting facts to influence the decision on the computer system. Lee said not only would changing the system be a financial burden, but instability could result in a damaging system crash.
The feud ended in the forced resignations of the two after the financial authority slapped both with heavy penalties that prevent them from working in the financial industry for at least three years.
While that situation damaged the financial group’s reputation, the outside directors were accused of failing in their checks-and-balances role against management.
KB Financial, in particular, has been the target of criticism. There are nine outside directors at the financial company and each takes home roughly 92 million won ($82,600) annually, the highest compensation among local financial institutions. Among the six whose terms end in March are four academics with no practical experience in the field.
Even Financial Services Commission Chairman Shin Je-yoon on Thursday accused outside directors of lacking expertise, but having lots of authority, in announcing the new government policy stiffening qualifications for outside directors in the financial industry.
At a shareholders meeting earlier Friday, a KB Financial Group outside director rejected the criticism. Kim Young-jin said outside directors are not a group of people who only care about their own interests, adding there is no reason for outside directors to be the victims of harsh criticism.
“Of course there are moments when we regret how we handled the situation [when a management feud erupted over changing the computer system], but judging by the experience and integrity of KB Financial Group outside directors, we are not people who should be criticized by the public,” he said. “The media has portrayed outside directors as people who are driven by our own greed and shy away from any responsibility, all the while busily securing our position. But I hope you would all understand that we are not such people.”
As pressure from the public and financial authorities mounted, Lee Kyung-jae, the group’s board chairman stepped down Thursday. Other outside directors said they will leave the board at the end of their terms.
Lee made an early exit since his term doesn’t end until March. He has served five terms as a outside director at the financial group.
In a statement released through the group, Lee said his heart is much lighter.
“I plan to step down as chairman of KB Financial Group’s board of directors and as the financial group’s outside director in light of the official inauguration of Chairman Yoon,” Lee said. “Since March 2010, I have been heading KB Financial Group’s board of directors, and though the board may have come up short of expectations, I fulfilled by duties to the best of my ability.
“My heart felt heavy as unfavorable situations unfolded one after another. But I am glad we have succeeded in normalizing management speedily with the help of the employees, as well as the board of directors. Today as I leave, my heart is lighter, as I can expect KB Financial Group will make a new leap as a leading financial group under the new Chairman Yoon.”
Another outside director, Park Jae-hwan, on Friday announced he will leave when his term expires Tuesday, Kim Joong-woong, who is the board chairman of KB Kookmin Bank, also decided to step down next year when his term ends.
By LEE HO-JEONG [email@example.com]
More in Industry
70 percent of workers in Korea are burned out, survey says
Boryung's cancer drug line gets GMP certification
Chaebol revert to remote working as Covid-19 cases rise
CSAT survival tools